MedPAC Wants to Cut Reimbursements to Off-Campus, 24-Hour Hospital EDs

Medicare reimbursements to many freestanding emergency rooms will be cut significantly if a new recommendation by the Medicare Payment Advisory Committee (MedPAC) is implemented. MedPAC voted unanimously to reduce reimbursements to off-campus, 24-hour hospital EDs located in urban areas within 6 miles of an on-campus ED by 30%. According to an Erdman analysis of the proposal, freestanding, off-campus EDs typically have lower operating costs than on-campus EDs but receive the same Medicare payments—giving them higher margins and a distinct competitive advantage. In addition, it noted that ambulances often bypass freestanding EDs in favor of hospital-based facilities, leaving the freestanding units to treat many lower-acuity cases (ie, those that could also be treated in an urgent care center). MedPAC noted that outpatient Medicare ED payments increased 72% per beneficiary between 2010 and 2016, which they likened to a reward for “treating lower severity cases in the higher-paying ED setting” (and thus, in essence, receiving “higher hospital outpatient payments for non-ED services”). If Congress follows the MedPAC recommendation, Erdman estimates that Medicare would save $250 million annually.