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SPONSORED: Legislation would increase transparency for freestanding emergency department pricing

Author: Tim Peters - March 19, 2018 - Updated: March 19, 2018


DENVER – Two bills have been introduced in this year’s state legislative session to promote reforms to medical facilities known as freestanding emergency departments (FSED) in Colorado. These proposals, proponents claim, would dramatically improve price transparency and ensure that patients have the information they need to understand what type of facility they are at and that the costs of receiving care at such a facility may be higher than other facilities.

A bill introduced in the state Senate, SB18-146, would require FSEDs to make certain disclosures to patients regarding the facilities’ roles and prices., There is also a House bill, HB18-1282, that has been introduced to assign FSEDs a unique billing code. This code is the technical equivalent of ensuring the FSEDs put the address of where services were rendered on the bill for those services. The bills are sponsored by legislators from both sides of the aisle.

This year’s proposed legislation comes in response to a series of complaints by patients who have sought treatment at FSEDs, often thinking they were urgent care centers, and were left with thousands of dollars in medical bills which could have been easily avoided. It also comes after several years of failed legislative attempts to address patient concerns. Patients also report being charged extra because the FSEDs did participate in patients’ insurance network health plans. Critics say FSEDs are taking advantage of consumers by not making clear the distinction between an urgent care clinic and an emergency department, and that FSEDs operate and charge the same as hospital emergency rooms despite often providing much more common types of health care services.

Urgent care facilities provide a lower cost option for patients seeking treatment for conditions that may not warrant the full service and cost of a hospital emergency room. But FSEDs charge hospital-level prices for their services even if they are not true emergency departments.

Often times FSEDs use marketing tactics that create confusion for consumers by positioning themselves as urgent care facilities. Critics and lawmakers say these practices have resulted in many people going to a FSED for issues that are more routine, requiring less acute diagnosis, treatment or care – even though an urgent care facility can provide the same care for lower costs.

The bipartisan Senate legislation, Senate Bill 18-146, seeks to address this problem by requiring FSEDs to disclose directly to patients, 1) that the facility is an emergency room, 2) that it is not an urgent care facility, and 3) its prices for the most common procedures and services provided.

This information, lawmakers say, will equip consumers with the knowledge they need to make informed decisions about whether to seek treatment at a FSED, or if it would be more prudent to obtain the same services at another, less costly facility.

“The problem we are trying to solve is people are often confused when they go into one of these facilities,” state Senator John Kefalas, D-Fort Collins, one of the bill’s sponsors told the Fort Collins Coloradoan last summer. “When we hear that people are getting zinged for a common ailment because they went to an emergency room rather than urgent care because that’s what’s open and they get a $1,000 facility charge, that’s what we are trying to solve.”

FSEDs, first conceived in the 1970s, were originally created to provide emergency room services to rural or other underserved areas that could not sustain a full ER-equipped hospital. Fast forward to today—and the majority of new FSEDs are now located in higher population, Front Range urban and suburban communities, where incomes and healthcare spending are higher and access to hospitals has not traditionally been a problem. In fact, FSEDs have seen an enormous uptick in growth in recent years, with most of these metro facilities having opened in just the last three years.

The bill’s proponents point out that one of the major drivers of increased costs of health care is inappropriate overutilization of hospital emergency rooms. Emergency rooms, health experts explain, include specialized equipment and medication to deal adequately with emergency situations and trauma cases, and have highly skilled staff on hand who are trained to handle such unique situations.

The costs for maintaining and operating ERs is much higher than many other health care facilities. When they are used to handle routine, common or nonemergent health issues, those costs are still passed on, making them a very expensive option for routine care. Because FSEDs are officially emergency rooms, they charge similar prices to hospital ERs. , This creates expensive options for common, non-life-threatening health issues, such as sore throats, headaches, severe colds and the like, which are more appropriately treated at an urgent care facility where costs can be 13 times lower.

All of this, proponents claim, points back to the core of the problem that Colorado legislators are trying to address –both FSEDs and urgent care facilities share very similar characteristics, making it difficult for consumers to know the difference, until it’s too late and the financial damage has already been done when the medical bills hit consumers’ mailboxes. Both FSEDs and urgent care facilities are free-standing, neighborhood-based buildings, not physically part of a hospital, and are similarly marked. This makes it easy for patients to seek treatment at a FSED, not knowing that they are about to incur hospital emergency room level costs.

Legislators say that this year’s legislation is all about transparency, making sure that consumers know how they are going to be charged before they incur the costs.

Critics of FSEDs add that greater price transparency will also help lower some costs that may be unnecessarily high in the first place. While they acknowledge that FSEDs will always be inherently more expensive, some point out that pricing for services exactly like a hospital does is unrealistic. For example, FSEDs often lack some of the specialized emergency equipment that a hospital-based emergency room will have access to. Experts say that because FSEDs have lower overhead costs than hospitals, similar pricing is downright unjustified. They suggest that injecting some transparency into the prices charged by FSEDs will serve to ultimately lower some of these costs.

Perhaps most notably, some legislators and consumer groups are also worried about some of the billing practices utilized by FSEDs that they say work to the financial disadvantage of the patients. Because FSEDs are an off-site arm of a hospital and not a separate, independent entity, their billing is rolled into that of the parent hospital. House Bill 18-1282 was recently introduced to address this issue by requiring FSEDs to apply for, obtain and use a unique national provider identifier, separate from the parent hospital, to ensure that patients know what FSEDs are charging them versus the parent hospital.

Coloradans have been stuck with unacceptably high healthcare costs for too long. A recent study by the Center for Improving Value in Healthcare, for example, found that Colorado’s healthcare costs are 17 percent higher compared to a cross-section of states nationally. Addressing this disparity requires us to understand where our healthcare dollars are spent. Colorado families, individuals, and businesses cannot afford for FSEDs to continue disguising their billing practices. HB18-1282 will provide the accountability necessary to understand healthcare costs.

Sias says that this is not a partisan issue, and that it is not a case of the state government overregulating a new industry. “Free markets and competition work to lower costs because consumers exercise their options to seek out the best service at the lowest price,” he said. “But that only works if those consumers have the information they need to be able to make those choices. What this bill does is to provide consumers with that information.”

At the end of the day, greater transparency is rarely a bad thing in public service, advocates say. Making sure consumers know what they are going to pay ahead of time and providing more detail on their medical bills is going to make sure fewer patients feel they have been taken advantage of while saving them considerable financial pain.

Tim Peters