'Price gouging' is worst for minorities and uninsured.
An analysis of billing records for more than 12,000 emergency medicine doctors across the United States shows that charges varied widely, but that on average, adult patients are charged 340 percent more than what Medicare pays for services ranging from suturing a wound to interpreting a head CT scan.

The report was published in JAMA Internal Medicine journal on May 30.

“There are massive disparities in service costs across emergency rooms and that price gouging is the worst for the most vulnerable populations,” said Martin Makary, MD, MPH, professor of surgery at the Johns Hopkins University School of Medicine and the study’s senior investigator. “Health care pricing needs to be fairer and more transparent,” added Makary.

For the study, Makary and his team obtained Medicare billing records for 12,337 emergency medicine physicians practicing in nearly 300 hospitals all 50 states in 2013 to determine how much emergency departments billed for services compared to the Medicare allowable amount.

The Medicare allowable amount is the sum of what Medicare pays, the deductible and coinsurance that patients pay, and the amount any third party such as the patient pays.

In addition, using the 2013 American Hospital Association database, the research team identified size, urban/rural status, teaching status, for–profit status, regional location and safety–net hospital status for each emergency medicine department whose billing data were made part of the analysis. Using the zip code for each emergency department, the researchers also estimated poverty rates, uninsured status and minority populations for those using each emergency room, based on data from the 2013 U.S. Census Bureau.

The researchers then calculated each service bill’s markup ratio, defined as the relationship between the billed charges and the Medicare allowable amount. For example, a markup ratio of 4.0 means that for a service with a Medicare allowable amount of $100, the hospital charged $400, or 300% over the Medicare allowable amount.

Makary and his team found that emergency departments charged anywhere from 1.0–12.6 times ($100–$12,600) more than what Medicare paid for services. On average, emergency medicine doctors had a markup ratio of 4.4 (340 percent in excess charges), or emergency medicine physician charges of $4 billion versus $898 million in Medicare allowable amounts.

The researchers also analyzed billing information for 57,607 general internal medicine physicians 3,669 hospitals in all 50 states to determine whether any markup differences, and how much, existed between emergency medicine physicians practicing in a hospital’s ER, and general internal medicine physicians who see patients at hospitals.

On average, charges were greater when a service was performed by an emergency medicine physician rather than a general internal medicine physician. Overall, general internal medicine physicians had an average markup ratio of 2.1 compared to the Medicare allowable amount.

Makary found that wound closure had the highest median markup ratio at 7.0, and interpreting head CT scans had the greatest within–hospital variation, with markup ratios ranging between 1.6 and 27.

For a physician interpretation of an electrocardiogram, the median Medicare allowable rate is $16, but different emergency departments charged anywhere from $18 to $317, with a median charge of $95 (or a markup ratio of 6.0). General internal medicine doctors in hospitals charged an average of $62 for the same service.

Overall, emergency departments that charged patients the most were more likely to be located in for–profit hospitals in the southeastern and Midwestern U.S., and served higher populations of uninsured, African–American and Hispanic patients.