After developing a chest cold and breathing problems last year, Susan Alexander went to First Choice ER, an independent emergency room in League City, Texas, drawn by its motto: Real ER. Real Fast.
Treatment was indeed speedy, about 20 minutes. It was also real expensive, Alexander said. The bill was about $2,000, or as much as five times what she might have paid for similar care at a doctor’s office. The charges included a $1,518 facility fee, typically assessed by hospitals and their ERs to support the space, services and equipment needed to keep dozens to hundreds of beds available.
Yet First Choice looks nothing like a hospital. It sits in a single-story commercial building that shares parking space with a hair salon and an energy company. Alexander’s out-of-pocket bill was about $700.
I was astonished, said Alexander, 56, a nurse. It’s a rip-off.
Free-standing ERs are among the fastest-growing areas of medical care, often offering 24-hour service, minimal waits, board-certified emergency specialists and complex testing technology. Proponents say they provide a safety valve for overcrowded and understaffed hospital ERs. Critics worry they’ll make care more expensive for those not seriously ill, adding to national medical costs expected to rise to $3 trillion in 2014 and undercutting efforts by the 2010 health care law to reduce payments for individual medical services.
First Choice and other stand-alone ERs say consumers should expect charges on par with those in hospitals because the service they offer is similar.
We’re an ER, First Choice spokeswoman Heather Weimer said in a telephone interview. That means it will cost more. We don’t try to hide it.
Alexander’s case was atypical, according to Weimer. It required a chest X-ray, steroid and breathing treatment and took longer than 20 minutes, she said. First Choice had no control over her out-of-pocket costs because that was based on what her insurer covers, Weimer said.
Consumers and some health insurers, led by Aetna, say the facility fees charged by many of the new ERs aren’t justified and lack transparency. Hospitals say the facilities take the privately insured, high-paying patients they need to survive and often don’t treat the uninsured or patients on government health plans, whom hospital emergency departments must serve.
That has prompted some states to require free-standing ERs that don’t take Medicare and Medicaid to provide critical treatment to anyone having a health emergency, regardless of the ability to pay. Medicare is the U.S. health program for the elderly and disabled. Medicaid is the joint U.S.-state plan for the poor.
Some stand-alone ERs are owned by doctors and investors, and others by hospitals, which do take Medicare and Medicaid and are bound by a U.S. law that they treat all emergencies. Critics say both often bill excessive fees even though they largely treat patients with non-critical ailments such as the flu or sore throats who could be seen in doctor’s offices or urgent care centers – practices designed to treat illnesses that aren’t life-threatening.
Physician and investor-owned ERs are skimming off the cream-of-the-crop patients, said John Milne, chairman of emergency medicine at Swedish Medical Center, a nonprofit health-care system in Issaquah, Wash. Many are glorified urgent-care centers, but they still bill ER charges.
A 2011 report for the Urgent Care Association of Americas shows that freestanding ERs charge up to $500 per patient as opposed to $135 by urgent-care centers, even though patients in freestanding facilities are much less likely than those going to hospital ERs to require complex care.
Unattached ERs and urgent-care centers transfer patients needing critical care to hospitals, and free-standing ERs typically have agreements with hospitals to take their patients. Hospitals charge facility fees to help them survive as insurers reduce payments for individual procedures. The fees typically cover items such as safe food, clean rooms, nursing care and administration costs, said Caroline Steinberg, vice president of trends analysis at the American Hospital Association in Chicago.
Hospitals couldn’t be open without being able to charge facility fees, Steinberg said by phone. It’s much more expensive to run a hospital than a physician’s office.
Tim Seay, president of the Greater Houston Emergency Physicians, which staffs four free-standing ERs in Texas, counters that freestanding ERs also must charge such fees. The expenses of a stand-alone ER are more than 10 times those of a doctor’s office or urgent-care center, with requirements for equipment such as CT scanners, Seay said in an email.
Hospitals massage any message to prevent competition that raises any health-care bar, he said.
Aetna, the third-largest private Medicare insurer, has sued at least three free-standing ERs and a hospital. In a lawsuit filed in August and amended in December 2012 in Houston federal court, Aetna said the ERs have wrongfully submitted facility fees. The businesses have masqueraded as hospital emergency rooms, without a license or any of the associated overhead, Aetna said in the suit.
The Hartford, Conn., insurer contends that Rayford ER Management and two other free-standing ERs entered into a sham management contract with Cleveland Imaging and Surgical Hospital in Cleveland, Texas. The ERs began seeking facility fees using the hospital’s tax identification number as a front, according to the lawsuit. Aetna has paid the three ERs almost $6 million, according to the complaint.
Larry Thompson, a lawyer at Lorance & Thompson P.C. in Houston, represents the stand-alone emergency departments. They don’t need to be licensed by the state because of legitimate agreements with the hospital, he said.
They are emergency departments, they bill as emergency departments, but because they’re not on a hospital campus, Aetna says they want their money back, Thompson said by phone. They’re picking on the little guys.
Humana, the second-biggest private Medicare insurer and part of the Aetna lawsuit, said it’s concerned patients don’t understand the cost differential between free-standing ERs and urgent-care centers.
That’s the situation of Diane MacQuoid, 52, a retiree from a manufacturing distribution business. She was charged more than $1,300, including a $625 facility fee, for treatment of a dog bite at a First Choice ER in Humble, Texas, and is paying $655 out-of-pocket, she said.
Nobody informed me there was a facility fee, MacQuoid said. There are clinics I could have gone to a mile away. It’s excessive. That could be someone’s grocery bill for months.
First Choice’s website includes an explanation of its fees. It uses a point system based on procedures performed, patient acuity, potential liability and the complexity of the physician/patient interaction.
Weimer, the First Choice spokeswoman, said MacQuoid’s out-of-pocket expense was high because her insurance deductible wasn’t met for the year. MacQuoid’s and Susan Alexander’s cases show that consumers must be better educated about how emergency departments differ from urgent care, Weimer said.
At least 16 states have laws allowing free-standing ERs, with varying licensing and operational guidelines, according to the American College of Emergency Physicians, or ACEP, in Washington.
Forty-five states have freestanding ERs owned by hospitals, led by Ohio with 29.