Health Care Costs and Financing

The gap between charges and payments for emergency department pediatric visits widened between 1996 and 2003

There is rising concern that the financial position of emergency departments (EDs) is threatened by efforts to contain health care costs. This was made clear in a recent study that found payments for pediatric ED visits that did not result in hospitalization did not keep pace with charges between 1996 and 2003, falling from 63 percent to 48 percent of charges during that time. This decline in ED reimbursements took place in all payer groups: public (Medicaid/State Childrens Health Insurance Program [SCHIP]), private, and uninsured. For all years, Medicaid/SCHIP had the lowest reimbursement rates, declining to 35 percent of charges in 2003.

The use of managed care arrangements by Medicaid programs has led to aggressive moves to reduce ED payments over time. Pediatric visits constitute one in every four ED visits. Thus, these problems raise doubts about the ability of EDs to recover the costs of caring for children.

Researchers used national data from the Agency for Healthcare Research and Quality's Medical Expenditure Panel Survey to track charges and payments for pediatric ED visits for various groups. They found that 54 percent of visits by children to EDs were privately insured, 33 percent were covered by Medicaid/SCHIP, and the remaining 12 percent were uninsured. Although nationwide aggregate charges for pediatric visits rose from $7.4 billion in 1996 to $10.2 billion in 2003 (a 39 percent increase), total payments remained constant at $4.9 billion per year, a less than 1 percent increase over 8 years. In percentage terms, the payment rate for privately insured payments declined the most, but the payment levels for these patients started at the highest level. In all three cases, the declining payment rate was largely the result of rapidly increasing charges, and payments were not keeping pace.

This study was supported by the Agency for Healthcare Research and Quality (HS13920).

See "Trends in charges and payments for nonhospitalized emergency department pediatric visits, 1996-2003," by Renee Y. Hsia, M.D., M.Sc., Donna MacIsaac, M.S., Erin Palmer, B.A., and Laurence C. Baker, Ph.D., in the April 2008 Academic Emergency Medicine 15, pp. 347-354.

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