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Upcoding: The real emergency in the ED

Visits to the emergency department (ED) make up almost half of all medical care visits in the US. Over the past few years spending in the ED has skyrocketed, according to the Health Care Cost Institute (HCCI), threatening access and financial security for the many Americans depend on the ED for essential care. 

In their Cost and Utilization Report released earlier this year, HCCI used insurance claims from patients under 65 with employer-provided insurance to uncover spending trends over the last few years. In a new analysis of the data on the HCCI blog, two disturbing patterns emerged in ED spending from 2009 to 2016: a sharp increase in ED spending, and an increase in the number of visits coded as very severe. Overall, ED spending increased 98% over this time period, to $894 per claim in 2016, while usage of the highest and second-highest severity procedure codes in the ED increased 38% and 16%, respectively. 

Are patients in the US having worse medical emergencies than in previous years? Probably not. Emergency department use as a whole decreased or remained unchanged in most states, and use of lower-severity codes decreased significantly. If medical crises were on the rise, one would expect use of all codes in the ED to rise, not just the most severe codes.

The more likely explanation is that EDs have been “upcoding” – portraying patient diagnoses as worse than they are in order to get reimbursed more. Upcoding is a widespread problem; Medicare wastes an estimated $10.2 billion each year from upcoding in private Medicare plans that are reimbursed by diagnosis rather than fee-for-service. Upcoding helps explain how a family can be charged $937.25 for one application of antibiotic cream, or $5,571 for an ice pack and ace bandage (see the Vox emergency bills database for more). 

Outsourcing ED clinicians has accelerated the pattern of upcoding and rising prices. The New York Times reported last year that staffing company EmCare was systematically upcoding and raising prices at hospitals immediately after they started staffing. At one hospital, the percentage of patient visits coded for the highest level of severity went from 6% to 28%. 

Who is shouldering the increasing cost of upcoding? More often then not, patients who visit the ED are on the hook because of the growing prevalence of high-deductible plans and insurance companies refusing to pay some or all of the visit cost. According to the HCCI report, out-of-pocket spending for ED visits increased by 56% from 2012 to 2016. But in the long run, we all pay for increasing health care costs through higher premiums and reduced resources for other social spending.