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Health Care Costs and Financing

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Declining payments for emergency care compromise the ability of EDs to provide emergency care to the uninsured

For impoverished and uninsured Americans, the emergency departments (EDs) of U.S. hospitals are a health safety net. However, their ability to provide emergency care to all patients, regardless of their ability to pay, is being threatened by declining overall payment rates, according to a recent study. As a result, cost shifting to private payers to fund care for the uninsured is becoming an increasingly untenable financing strategy, conclude Alexander C. Tsai, M.A., and Joshua H. Tamayo-Sarver, A.B., of Case Western Reserve University. In the study, which was supported by the Agency for Healthcare Research and Quality (National Research Service Award training grant T32 HS00059), the researchers analyzed charges, payments, and payer for ED visits based on Medical Expenditure Panel Survey (MEPS) data from 1996 and 1998.

Total paid ED charges declined by 7 percent from 60 percent in 1996 to 53 percent in 1998. Although the percentage of total charges paid by Medicaid, Medicare, and the uninsured remained constant, the percentage of total charges paid by the privately insured declined 12 percent, from 75 percent to 63 percent. At the same time, overall adjusted mean ED charges increased from $695 to $798. Adjusted mean charges increased 32 percent for the uninsured (from $544 to $740) and 23 percent for the privately insured (from $658 to $813). Charges did not increase significantly for those insured by Medicare and Medicaid. These increased charges, if they reflect increases in the true resource costs of use, along with declining overall payments, suggests that EDs are struggling financially.

On the other hand, the declining payment rate might be partly explained by unjustified ED charge inflation, or it could be due to unmeasured confounding factors. Assuming that the increases in the efficiency of ED care have not outstripped increases in the severity of illness of ED patients, a reasonable implication is that the actual costs of care truly are increasing.

See "Declining payments for emergency department care, 1996-1998," by Mr. Tsai, Mr. Tamayo-Sarver, A.B., Rita K. Cydulka, M.D., M.S., and David W. Baker, M.D., M.P.H., in the March 2003 Annals of Emergency Medicine 41(3), pp. 299-308.

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