Life, Liberty, & Happiness

The Hidden Costs of Visiting an ER


pending on emergency room fees has increased by $3 billion — even though the number of fees is declining.

There are 141 million visits to the emergency room each year, and nearly all of them have a charge for something called a facility fee. This is the price of walking through the door and seeking service. It does not include any care provided.

Emergency departments argue that these fees are necessary to keep their doors open, so they can be ready 24/7 to treat anything from a sore back to a gunshot wound. But there is also wide variation in how much hospitals charge for these fees, raising questions about how they are set and how closely they are tethered to overhead costs.

Most hospitals do not make these fees public. Patients typically learn what their emergency room facility fee is when they receive a bill weeks later. The fees can be hundreds or thousands of dollars. Emergency room facility fees are usually coded on a 1 to 5 scale, to reflect the complexity of care delivered to the patient, with level 4 and 5 being the most expensive - and with hefty fees as a result.  

A recent study by the Health Care Cost Institute (HCCI) reveals that emergency rooms all across the country are increasingly using these higher-intensity codes, and that the price of these codes has increased sharply since 2009. HCCI analyzed 70 million insurance bills for emergency room visits from between 2009 and 2015. The study was focused on the prices that health plans actually paid hospitals for facility fees, not the hospital charges (which can often be inflated 2-4 x well above what health plans actually pay).

The study found that the price of these fees rose 89 percent between 2009 and 2015 — rising twice as fast as the price of outpatient health care, and four times as fast as overall health care spending.

Overall spending on emergency room fees rose by more than $3 billion between 2009 and 2015, despite the fact the HCCI database shows a slight (2 percent) decline in the number of emergency room fees billed in the same time period. “It is having a dramatic effect on what people spend in a hospital setting,” says Niall Brennan, executive director of the Health Care Cost Institute. “And as we know, that has a trickle-down effect on premiums and benefits.”

The HCCI data shows that prices are rising dramatically and that, increasingly, hospitals have gravitated to using the most expensive billing codes — the level 4 and 5 charges, typically reserved for the most complex visits. The rising price of emergency room facility fees coupled with growing usage of the most expensive codes mean it’s significantly more expensive to go to an emergency room now than it was six years ago.

Some experts on emergency billing argue that this is evidence of hospitals taking advantage of their market power — charging high fees because they are often the only place, late at night or on the weekend, where Americans can seek health care. “If you have a monopoly - and when it comes to the ER, it’s a monopoly - you can set any price you want,” says Robert Derlet, a professor emeritus in emergency medicine at the University of California Davis, who has been critical of ER billing in the past.

Two different hospital trips for the same condition may be treated and billed quite differently. A case of strep throat treated with oral antibiotics — a simple visit — would likely be coded as a level 1 or 2 visit. But a visit with multiple scans and an IV drip could come out to a 4 or 5.

The HCCI data set suggests that more and more emergency rooms are billing the severe, expensive facility fee charges.

What’s more, there are no federal guidelines on how to code even the exact same visit. This is left up to a hospital’s billing staff, meaning that if two patients receive identical care in different emergency rooms, one may be coded as a level 3 and another as a level 4. These discrepancies can be expensive for patients, as emergency rooms charge hundreds of dollars more for the more severe codes. The HCCI database shows that the average price of a level 3 facility fee (in medical coding, this is billed as 99283) is $576. Go up to the next severity code, level 4 (or, in medical codes, 99284), and the price rises to $810. In 2009, 50 percent of all emergency room facility fee charges were for level 4 and 5 codes. In 2015, that number rose to 59 percent.

How to interpret that trend isn’t fully clear. Some say it could signal hospitals charging higher rates for similar care. But the current data makes it impossible to rule out the fact that emergency room visits may just be getting more serious. “At face value, it might suggest that patients are showing up at the ER sicker or with more serious injuries,” says Jonathan Mathieu, chief economist at the Center for Improving Health Care Value in Colorado. His group has documented similar, state-level trends to what the HCCI national data set shows. “This feels a little shaky, for a lack of a more elegant term, because it is the same trend year over year over year.”

The government has tried to crack down on high emergency room fees before. In 2012, an investigation by the Center for Public Integrity showed that hospitals had earned an additional $1 billion in Medicare revenue by using the most expensive facility fees - the level 5 codes. This meant that the public insurance program that covers Americans over 65 was suddenly spending significantly more money on these routine fees. After intense push back from hospitals and doctor groups, the issue was dropped and the fee levels remain today.

So buyer beware. If you visit an emergency department, you will get charged a facility fee along with any other services provided. And it will likely be quite expensive.

About Dr. Michael Burcham

Michael is an executive coach, entrepreneur, investor, and strategist with 30 years of experience leading investor-backed, high-growth organizations.

“I built and sold a $40M company with Dr. Burcham as my mentor. This is the thing: if you EVER get the opportunity to learn from this man, from that moment forward, you’ll list him as one of the most influential people in your life, even if you live to be 90. And, you’ll know how lucky you were to have that opportunity and you’ll immediately say YES to any chance to be in his presence again—his wisdom is that impactful.”

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Former CEO, Letter Logic

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Director, U.S. Department of Commerce


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