Variation in markup of charges in emergency department and internal medicine services

1. Based on this retrospective cohort analysis, there is substantial variation in markup of charges across the United States for services performed for uninsured or out-of-network patients.

2. Emergency department services demonstrated greater markup (4.4-fold average increase compared to Medicare/Medicaid) than internal medicine services (2.1-fold increase). Hospital for-profit ownership, percentage of uninsured patients seen, proportion of racial minorities, and geographic location also predicted increase in markup.

Evidence Rating Level: 2 (Good)

Study Rundown: In the United States, patients receiving medical care with no insurance or at an out-of-network hospital often end up paying for medical services with a substantial markup compared to Medicare/Medicaid rates. Medical expenses are a leading cause of bankruptcy, and understanding how these charges are determined may influence policy changes. Emergency department services may be of particular importance given the acute nature of presentations often preclude the ability to seek therapy at other locations. The current study evaluated services provided by internal medicine and emergency department physicians in hospitals in all 50 states. There was substantial variation in markup of charges for services across hospitals. However, emergency department services demonstrated greater markup than those delivered internal medicine. Other predictors of increased markup included for-profit hospital status, geographic location (greatest in southeastern states), and a patient population with a greater proportion of uninsured, black, or Hispanic patients.

The study reinforced previous investigations which demonstrated significant variation across the United States in charges for similar services, in particular for the uninsured or out-of-network patients. The study did not evaluate the actual cost to patient; which may be drastically different than what was charged.

Click to read the study in JAMA Internal Medicine

Relevant Reading: 8 Variation in Emergency Department Pricing in the United States

In-Depth [retrospective cohort]: This study used the 2013 Medicare Provider Utilization and Payment Data to evaluate claims billed by internal medicine and emergency physicians as well as the 2013 American Hospital Association Database to characterize hospital sites. Markup ratios were determined as the ratio of billed charges to the Medicare-allowable amount. In total 12 337 emergency physicians and 57 607 internal medicine physicians across all 50 states were included in the analysis. On average the emergency physician services were associated with a markup ratio of 4.4 (340%) compared to 2.1 (110%) for internal medicine services. By hospital, variation in ED service markup ranged from 1.0 to 12.6, and internal medicine markups ranged from 1.0 to 14.1. ED markup ratios were greater in for-profit hospitals (median markup 5.7), uninsured population >20% (median ratio 5.0), and in areas with greater African-American (median ratio 5.0), and Hispanic (4.4) populations defined as >20%. Internal medicine markups did not demonstrate similar associations.

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