Insurers oppose investor-owned ERs charging large fees

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 really expensive, Alexander says. The bill was about $2,000, or as much as five times what the 56-year-old nurse 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 was left with an out-of-pocket bill of about $700.

“I was astonished,” she says. “It’s a rip off.”

Freestanding 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 Patient Protection and Affordable Care Act 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 it offers is similar.

“We’re an ER,” First Choice spokeswoman Heather Weimer says. “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 says. First Choice had no control over her out-of-pocket costs since that was based on what her insurer covers, Weimer says.

Consumers and some health insurers have a different view. Led by Aetna Inc., they say the facility fees charged by many of the new ER aren’t justified and lack transparency. Hospitals contend the facilities drain away the privately insured, high-paying patients they need to survive. And many don’t treat the uninsured or patients on government health plans, people hospital emergency departments are required to serve.

That has prompted some states to require freestanding ERs that don’t take Medicare and Medicaid to provide critical treatment to anyone having a health emergency, regardless of the ability to pay.

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,” says 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.”

Aetna, the third-largest private Medicare insurer, has sued at least three freestanding 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,” Hartford, Conn.-based Aetna said in the suit.