Emergency care cost estimates are too low

Alternately praised in the aftermath of horrible tragedies as a heroic service and lamented in policy debates as an expensive safety net for people without primary care, emergency medicine is often a hot topic. Despite that importance, an analysis published online April 26 in the Annals of Emergency Medicine finds that national expenditures on emergency care are likely significantly higher than previously thought.

“The ER has become increasingly important as a place where people go for acute unscheduled care, however there has been little rigorous analysis of its cost structure,” said paper lead author Dr. Michael Lee, assistant professor of emergency medicine in the Warren Alpert Medical School of Brown University and a physician at Rhode Island Hospital and The Miriam Hospital.

Lee, who had a prior career in economics and finance before training in emergency medicine, co-wrote the analysis with Dr. Brian Zink, professor and chair of the Department of Emergency Medicine at the Alpert Medical School, and Dr. Jeremiah Schuur, assistant professor at Harvard Medical School and director of quality and patient safety for the Department of Emergency Medicine at the Brigham and Women’s Hospital.

The challenge of properly accounting for the costs of emergency care, Lee said, becomes crucial as health care financing moves from a fee-for-service model to bundled payments for patient populations or episodes of care.

Clarifying costs

The analysis first examines current estimates of aggregate spending on emergency department (ED) care. The Agency for Healthcare Research and Quality’s Medical Expenditure Panel Survey (MEPS) estimates $48.3 billion of spending on emergency care in 2010, or 1.9 percent of the nation’s total health care expenditures of $2.6 trillion. With the message that “The total cost is small relative to the entire health care system,” the American College of Emergency Physicians has embraced the AHRQ figure in its “Just 2 percent” public relations campaign.

But Lee and his co-authors point out, based on data from other studies, that MEPS undercounts the number of ED visits and the number of ED patients who are admitted to hospitals. Adjusting for those discrepancies using data from a variety of other published sources, the authors estimate that ED costs are between 4.9 percent to 5.8 percent of total health care spending.

The authors went beyond national data sets, including the National Emergency Department Sample, to review ED spending data from a different source: a major national private insurer. The data included charges from doctors and hospitals for imaging, testing, and other procedures. But again there were accounting differences between admitted and discharged patients and a need to account fully for spending from Medicare and Medicaid. The authors’ estimate based on this data is ED spending that is 6.2 to 10 percent of total health care spending.