The Growing Evidence of the Value of Emergency Care

In their article, “Costs Associated with Ambulatory Care Sensitive Conditions Across Hospital-based Settings” in this issue of Academic Emergency Medicine, Galarraga et al.1 find that a large proportion of ambulatory care sensitive conditions (ACSCs) result in emergency department (ED) visits (36%) or hospitalizations (23%). Importantly, the authors find that charges and payments for these ACSCs are significantly higher than ACSC visits managed in outpatient hospital-based clinics. The authors find the increasing disconnect between charges, payments, and “cost” in the health care system, while noting that hospital facility fees account for the overwhelming majority of the differences in both charges (77% to 94%) and payments (81% to 93%). The authors make a significant contribution to the understanding of the costs of care for patients with ACSCs and highlight the constructive role that EDs can play in reducing the total costs of care for patients with ACSCs. This study articulates the effect of current market dynamics and policies on health care costs. By acquiring physician practices, hospitals now commonly charge facility fees for visits and procedures performed in outpatient settings. Hospitals also gain leverage with payers to negotiate higher prices.2 In fact, this study likely underestimates the actual differences in costs between inpatient and outpatient settings, since the authors only included hospital-based clinics in their analysis. Hospital outpatient facility fees typically apply to care in ED settings, including hospital-owned freestanding EDs and urgent care centers. These hefty outpatient charges not only confuse patients, but often saddle them with additional out-of-pocket costs, especially for the many individuals who have high cost-sharing requirements (e.g., high-deductible health plans). The higher charges for ED care depicted in this study also expose the bizarre way in which hospitals allocate indirect and overhead costs, which distorts the actual variable costs associated with each ED visit. This is then reflected in high charges to individual patients and payers. The high charges for ED-based care have driven significant numbers of patients and payers to seek care in alternate settings such as retail urgent care or avoid seeking care altogether for conditions that would benefit from timely medical attention. For a growing group of patients, hospitals and their EDs are excluded from narrow provider networks altogether, and patients are responsible for the entire payment for services in the ED.3 Instead of compromising potentially lifesaving care, a more appropriate policy goal is to ensure that all patients have timely and affordable access to unscheduled emergency care, with most of the payment covered by an insurer. This study also underscores the increasingly important role of emergency physicians in value-based care delivery. Given the high cost differential between hospital-based and outpatient care, EDs can play a constructive role in constraining the growth of avoidable inpatient admissions. Indeed, the ED acts as the front door to hospitals, accounting for 68% of all hospital admissions in this country.4 The 2011 CDC NHAMS survey estimates that nursing home patients accounted for 2.6 million ED visits.5 Brownell et al.6 found in a similar evaluation that 19.1% of those visits are attributed to ACSCs. In the current system, hospital admission is often the path of least resistance and rewarded financially in a volume-based reimbursement paradigm. Yet, the health care value landscape is changing rapidly. In a value-based world, emergency physicians will increasingly coordinate care efforts with primary care physicians, specialists, and care managers, especially for patients with chronic, complex medical conditions. This will make timely, patient-centered, and coordinated follow-up care a viable and often preferred alternative to hospital admission. A major challenge to date is that neither emergency physicians nor provider organizations had the incentives, care delivery infrastructure, or data and analytics needed to support these efforts. Recently, however, there has been rapid adoption of new care delivery and payment models in both the public and the private sectors, such as accountable care organizations, bundled payments, and capitated/global payment models. Enrollment in Medicare Advantage has surged by over 40% since 2010, with an increasing number of patients being treated in narrow network HMO plans.7 Provider organizations are increasingly developing clinically integrated networks to support these efforts. Given the intersection between acute hospitalization and chronic outpatient care, EDs will play a critical role in the ultimate success of these new care models. There are also valuable opportunities to manage certain ACSC patients in a protocol-driven ED observation unit or clinical decision unit rather than an extended inpatient observation stay.8, 9 There is significant value in emergency services improving care quality and the patient experience, while lowering costs by reducing unnecessary admissions and testing. There is an important opportunity to test new approaches to fully engage emergency physicians in this paradigm shift to value-based care, including better alignment of incentives with these care delivery objectives. One important limitation of this study is that we cannot reliably ascertain which ACSCs could have been realistically treated in outpatient settings. The ED provides 28% of all acute visits in the United States and the overwhelming percentage of off-hours visits, including nights, weekends, and holidays.10 Many patients with acute exacerbations of chronic disease need ED-based care, because of either the severity of their illnesses or their lack of access to care in other settings. These patients can quickly overwhelm the capacity of most primary care practices to perform unscheduled evaluation and treatment, especially for patients with undifferentiated signs and symptoms. Access to outpatient primary and specialty care is often a problem—according to a CDC study, 80% of adults who visited an ED did so because they lacked access to other providers.5 In addition, the recent RAND study demonstrated that 80% of patients who first contacted their primary care physicians for acute issues were then referred to the ED by those same primary care physicians.10 We also note that in many cases, ED-based evaluation and treatment is more efficient than visits in outpatient settings, since ED evaluation and definitive diagnostic testing can be performed rapidly (e.g., CT angio for PE) and replaces the need for multiple office visits, serial and repetitive testing, and specialty consultations. Expedited evaluation can also significantly mitigate the indirect costs patients face, such as lost work days, lost income, and health care anxiety, further highlighting the potential value of ED-based care. While efforts to increase primary care infrastructure and access are clearly important, the reality is that the ED is the diagnostic and rapid treatment resource in the community and will continue to serve as a backbone for both acute and chronic medical care in the United States. Thus, we need to primarily focus our efforts on improving the value of ED-based care, not on reducing ED utilization. One important study finding is that, not surprisingly, the ED had the highest percentage of unreimbursed, uncompensated care, accounting for 13.3% of all ACSC visits to the ED. The study also shows that the greatest discrepancy in charges and payments is for emergency care versus hospital or outpatient care. As many in the emergency medicine community already know, EDs provide more uncompensated care than either hospitals or outpatient clinics and more care to the uninsured and Medicaid patients than all other specialties combined.11 The current burden on EDs is further compounded in states that have elected not to expand Medicaid. Hospitals typically negotiate payment rates with private payers for a broad swath of clinical services simultaneously, and it is not uncommon for hospitals to negotiate lower ED payment rates in exchange for concessions for higher payment rates in other clinical areas. The enormous financial strain on EDs can lead them to reduce services or close altogether, leading to decreased access and worse outcomes for underserved populations.12 Thus, we need to be cognizant of the effect of current payment policies on EDs, which could have unintended consequences by reducing payments to hospitals that already provide a disproportionate share of care for patients with more complex medical problems. Instead, payment policies should facilitate the creation of a high-value emergency care system and address the strain placed on EDs that serve underinsured or safety net populations. The framework of value for Americans needing unscheduled health care, and care beyond the services provided by primary care, is built around the emergency care system. Structured investments in the emergency care system will strengthen its integration with the rest of our health care system. More rational approaches to hospital charges and cost allocation, coupled with effective payment models, will allow patients and communities to fully realize the potential of a high-value emergency care system.