Pediatric ER utilization algorithm hurts Black and Hispanic patients, study finds

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A diagnosis claims-based algorithm used by payers to decide whether pediatric patients need to be taken to the emergency department has been promoted as a way to cut healthcare costs. But according to a new study in JAMA Network Open, this algorithm will often bill Black and Hispanic patients more for care than their white counterparts.

Visits to the ED by Black (50%) and Hispanic (49%) children had a higher likelihood of being algorithmically identified as "non-emergent" than visits from white children (45%), which may introduce or exacerbate inequity in healthcare financing.

Modeling showed per-visit reimbursement that was 6% lower for visits by Black children, and 3% lower for visits by Hispanic children, relative to visits by white children.

This apparent inequity, authors said, is the unintended result of efforts to moderate cost growth in healthcare, including reducing wasteful spending and avoiding non-emergent ED visits. Among children, it has been estimated that up to 60% of ED visits may be avoided through better, more coordinated primary care.

Recently, in many different geographies, health insurers have enacted policies aimed at discouraging non-emergent ED visits through reimbursement reductions for visits determined retrospectively to have taken place for non-emergent reasons. They often do this by applying diagnosis-based claims algorithms.

These algorithm-based policies are expanding nationally, but have received scrutiny from advocacy groups and clinicians regarding their perceived inaccuracy, and the inappropriateness of using financial reimbursement to avoid incentivizing ED care. Particularly problematic is that these algorithms derive emergent need for ED visits from billing codes rather than the presenting symptom. In some settings these policies have been delayed or reversed, but they remain active in many Medicaid programs, authors found.

WHAT'S THE IMPACT?

Using an algorithm developed by the Virginia Department of Medical Assistance, researchers reviewed more than eight million claims from 2016 to 2019. They found that Black and Hispanic children were significantly more likely to have their ED visits classified as non-emergent. Insurers using these algorithms for reducing reimbursement for certain ED visits may inadvertently contribute to relatively lower payment for ED clinicians caring for Black and Hispanic children.

When clinicians and facilities receive lower reimbursement, authors said, this reduces these systems' ability to make infrastructure investments to support access to high-quality services. And while the relative reimbursement difference across groups was relatively small, the effects may be compounded, because the clinicians and facilities serving higher numbers of Medicaid enrollees are further underfunded through these and other reimbursement policies.

Families may also forego or delay needed emergency care due to the risk of additional out-of-pocket cost at the ED, authors said.

THE LARGER TREND

Because of the theoretical nature of the study, authors said the results are not an indictment of current policy, or the Virginia Medicaid system. Rather, the results should be considered a "representative estimate" of what would happen if the policy was rolled out across broader geographies.

"While diagnosis-based claims algorithms for classifying ED visits can be efficient tools for monitoring utilization patterns, their lack of universally accepted conventions, discordant results across administrative and clinical definitions, and potential racial and ethnic bias should serve to raise concern regarding their use in informing reimbursement policy for children," authors said.
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com