Adjusting the reimbursement rates for the emergency room can reduce unnecessary health care costs in Virginia – State of Reform

To reduce unnecessary healthcare costs in Virginia, members of the Joint Commission on Health Care reviewed one analysis use of the emergency department (ED) and related costs this week. The overall policy recommendation from the report was to adjust the reimbursement rates of certain facilities based on their operation and care.

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Health care spending in Virginia increased 20.9%, or $ 13.2 billion, from 2014-2018, according to Mark Miller, PhD, executive vice president of health care at philanthropy Arnold Ventures. Miller said this growth was driven by rising costs of services, particularly in the ED sector. According to national data collected by Arnold Ventures, ED visits are over six times the cost of primary care visits despite treating patients with similar conditions. The data also indicate that 30% of ED visits could have been treated in a primary care clinic or other alternative setting.

According to the analysis, Virginia spends disproportionately more on hospital systems than through Medicare programs. Miller, who studied three of the state’s largest hospital systems, said their ED rates were as much as 326% higher than Medicare services.

Miller said savings achieved by reducing unnecessary health care costs could be shifted to other health care needs.

He outlined several policy solutions that the Commission should consider reducing unnecessary spending:

  • Develop uniform coding standards across hospitals that would prevent certain hospitals from charging more for a similar level of care than at other facilities
  • Develop incentives to avoid ED exploitation, and focus instead on building a coordinated or integrated care system
  • Re-determine reimbursement rates based on a facility’s operating hours or level of care

Miller said an exception to the last recommendation would be emergency care centers in the countryside or independent emergency rooms. He said these facilities should be considered as emergency rooms at the hospital.

“I would suggest that you might want to maintain higher rates and rates that may not quite match the patient mix that goes in the door just because it is the only source of care in an isolated, rural community.”

Senator Barbara Favola (D – Arlington), put forward an argument that hospitals could come up with in light of possible reimbursement cases.

“Hospitals will claim that some of their emergency room patients are really very high-acuity care. They have complex medical diagnoses and they should not actually be penalized for the costs associated with caring for these very sick people. How do we promote this coordination of care for each patient, but still recognizes that a reduction in the cost allowance for different patient models must be appreciated? “

Miller replied that any change in reimbursement rates should focus on determining whether a facility functions more like a 24/7 ED (with higher reimbursement) or an emergency care center or primary care (with lower reimbursement than EDs).

Current payment reform initiatives in Virginia include the Department of Medical Assistance Services (DMAS) value-based procurement program, which focuses on performance metrics for the quality of care provided.

DMAS is working on implementing one pilot program for a value-based purchasing model in nursing homes. The initial methodology for the program is due to be reviewed by the legislature by the end of 2021. If successful, the program could expand to other healthcare services, such as hospitals and EDs.

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