The Future of Freestanding ERs

We have some 500 freestanding ERs in the United States. One hundred and eighty of them are in Texas, predominantly in urban areas. Originally touted as a panacea for hospital-poor rural areas, recent proposals to rein freestanding ERS in tell us that is not where the growth has been.

Freestanding ERS come in two flavors: hospital-affiliated and non-hospital affiliated. The latter are not bound by federal EMTALA obligations, though some states have added access obligations of their own. 

MedPAC is poised to propose to alter Medicare reimbursement for freestanding hospital-affiliated ERS in close proximity to hospital based ERS, acknowledging that these facilities cherry pick less complex patients at what has been the same reimbursement rates (where the facilities fee component for ERs matters).

Why have a hospital-affiliated  freestanding ER in such close proximity to a hospital based ER?  Customers like the easier access.  Less complexity dials down the chaos a bit, apparently. You can bill at the hospital facility rate for services performed at the satellite that may have directed elsewhere in the health care system. 

Why not have a freestanding  hospital-affiliated ER in such close proximity to a hospital based ER?  Customers will prefer the easier access of the satellite ER and, eventually, sort themselves by severity between the two ERs, leaving a distorted severity mix and payor mix.  And hospital affiliated ERS will not like being left only with the more demanding, though not necessarily more richly reimbursed, cases. The satellite allows the hospital mother ship to reach more patients of lower acuity at higher facility based reimbursement rates. 

By all accounts, MedPAC is still not loving non-hospital affiliated ERs, as they  remain unable to participate in Medicare. Will the MedPAC proposal slow the growth of hospital-affiliated freestanding ERs? It seems likely.  Will the MedPAC proposal slow the growth of non-hospital affiliated ERs? Not one bit. 



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