A new study conducted by Johns Hopkins University School of Medicine revealed that in emergency rooms throughout the United States, people are overcharged for treatments and services. In fact, those people are charged on average 340 percent more than the Medicare allowable amount. The people who bear the brunt of the overcharges include those who are uninsured and minorities.
The study demonstrates that more transparency is needed in hospitals to ensure all patients are charged the same amount for treatments and services.
“There are massive disparities in service costs across emergency rooms and that price gouging is the worst for the most vulnerable populations,” Martin Makary, a professor at Johns Hopkins School of Medicine. “Our study found that inequality is then further compounded on poor, minority groups, who are more likely to receive services from hospitals that charge the most.”
The research team analyzed 2013 medical billing records for a total of 12,337 emergency room physicians in approximately 300 hospitals located in all 50 states. Those records were then cross-referenced with the 2013 American Hospital Association database to verify the actual regional location, size and other important details – teaching status, for-profit status and rural/urban status – of each emergency department. The Medicare allowable amount, the total amount paid by Medicare for a specific procedure or service, and costs billed to the patients were also compared.
The findings revealed that between the Medicare allowable amount and charges billed to the patients was known as the markup ratio. For example, a markup ratio of 4.0 for a procedure with a Medicare allowable amount of $100, the patient would be charged $400 by the hospital, which is 300 percent more than the Medicare allowable amount.
The research team discovered emergency medicine physicians had a markup ratio on average of 4.4, when compared to the Medicare allowable amount, which resulted in 340 percent more in charges. The emergency departments located in for-profit hospitals and in the Midwestern and southwestern United States were more likely to charge patients the most, as well as serve populations of uninsured Hispanic and African-American patients. The greatest median markup ratio at 7.0 was for wound closure services. The service that had the greatest in-hospital variation was the interpretation of head CT scans, which had a markup ratio between 1.6 and 27 in just one hospital.
“This is health care systems problem that requires state and federal legislation to protect patients,” says Tim Xu, a medical student at Johns Hopkins Hospitals. “Patients really have no way of protecting themselves from these pricing practices.”
The study was published online in JAMA Internal Medicine on May 30, 2017.