ACA may benefit EDs
But that doesn't mean they won't be losing money
A recent study in the Annals of Emergency Medicine suggested that the insurance coverage expansion provisions of the Affordable Care Act might impact the bottom line of emergency departments across the country in a positive way, but that doesn’t mean EDs will be flush.
For the ED study, researchers from George Washington University looked at two groups potentially impacted by the ACA: uninsured patients who will be eligible for Medicaid in 2014 and the uninsured who may purchase private insurance on the exchanges.
[See also: Emergency departments now account for half of all hospital inpatient admissions]
“Patients who are uninsured tend to receive a high bill because they don’t get the negotiated rate from insurers,” said Jesse Pines, one of the study’s authors and director of the Office for Clinical Practice Innovation at the university. “Some will pay the bill and some don’t and some will pay a percentage. Overall the question is when we compare uninsured and Medicaid, does being uninsured pay better than Medicaid.”
They analyzed emergency department charges from 2005 to 2010 and found that Medicaid reimbursed 17 percent more than uninsured individuals paid. The difference for private insurers was even greater; they reimbursed 39 percent more than uninsured individuals paid to providers.
But Pines said this study is merely one look at what the net impact of the ACA will be on emergency rooms. Reimbursements by payers and providers may increase, but other reimbursements, like disproportionate share hospital funds, will go down.
“Ours was only one part of that equation,” he said. “We can’t say that the ACA will be a boon for EDs. It is still very much an open question depending upon what happens to volume and how other payments will impact EDs.”
William Durkin, president of the American College of Emergency Physicians, said the study is slightly deceptive because, while Medicaid may pay more than a cash-pay patient, it doesn’t mean EDs won’t still be losing money.
“Now they are going to be paid at the Medicaid rate which doesn’t cover the cost of seeing a patient in many states,” he said. “They will still be losing, just not losing as much money.”
This will likely not be the trigger to reopen emergency departments that have closed. Durkin said. Studies have shown that many ED closures were due to a complete hospital closure. They are often attributed to things like highly competitive markets and low profit margins. According to Pines, it might not be a payer mix that is causing the closures as much as a poorly run facility.
Because of their patient mix, many think of EDs as loss leaders, but Durkin said that is a wrong-headed assumption. Often, about 70 percent of hospital admissions come through the emergency room – they are, in fact, profit drivers.
“The emergency department is the front door of the hospital, not the back door,” Durkin said.
The bottom line of safety-net hospitals will likely be the most impacted, Durkin said. Institutions with a high number of uninsured, low-income patients should have fewer self-pay patients and more reimbursements from public or private insurance. Overall, there ED burdens should be reduced.
