Reimbursement News

NJ Passes Medicaid Reimbursement Cap on Non-Emergent ED Services

New Jersey policymakers recently passed a $140 Medicaid reimbursement limit on hospitals delivering emergency services for non-emergent cases.

Medicaid reimbursement and emergency department services

Source: Thinkstock

By Jacqueline LaPointe

- Hospital emergency departments are one of the most expensive care settings, and New Jersey policymakers are trying to ensure providers only get paid for delivering emergency services to patients who truly need them.

The Garden State’s Assembly and Senate recently passed a bill that would cap Medicaid reimbursement to hospitals delivering emergency department services to patients with non-emergent conditions or injuries.

The legislation would establish “a Medicaid emergency room triage reimbursement fee for low acuity emergency room encounters of patients enrolled in the State Medicaid fee-for-service program,” meaning hospitals delivering emergency services to low-acuity patients covered by the state’s Medicaid fee-for-service program would receive just $140 as final payment.

Under the bill, the Commissioner of Human Services would also need to define low-acuity by publishing a list of diagnostic codes that would prompt a hospital to receive the capped Medicaid reimbursement rate.

Emergency department visits are already costly, but those encounters in which a patient’s conditions can be treated appropriately elsewhere drive up excessive costs.  An estimated 13 to 27 percent of emergency department visits could be managed in a physician office, clinic, or urgent care center, saving approximately $4.4 billion annually, recent research shows.

READ MORE: The Difference Between Medicare and Medicaid Reimbursement

Medicaid beneficiaries also use the emergency department at a nearly two-fold higher rate compared to their privately insured peers, and they are flocking to hospital emergency rooms because of unmet health needs and lack of access to appropriate care settings, CMS reports.

These trends in emergency department utilization spell trouble for state Medicaid programs, which already operate on strict budgets.

The most recent effort to curb emergency department misuse and spending in New Jersey could be the right payment model to reduce spending, President of the New Jersey Association of Health Plans Wardell Sanders recently explained to local news source NJ.com.

“New Jersey needs to move away from a payment model that gives financial incentives to deliver primary care in the most expensive care setting,” he said.

“Better primary care is rendered by doctors who know their patients, know their case histories and see them regularly. This bill takes a small first step towards better aligning payment with the appropriate care setting.”

READ MORE: ER Spending Rose 99% Since 2009 Despite No Change in Utilization

However, hospital advocates disagreed, arguing that the bill targets the wrong stakeholder when it comes to emergency department misuse.

“The reality is that patients are showing up in the ER because the managed care organizations have failed to provide proper access to care for this vulnerable population,” Neil Eicher, Vice President of the New Jersey Hospital Association, told the local news source.

“Hospitals should not be penalized for doing the right thing by providing quality care to patients who show up at our doors because insurance companies have failed to provide a network of providers available to these patients.”

While the New Jersey bill sits on the governor’s desk for finalization, other stakeholders are tinkering with similar strategies to reduce their emergency department spending and misuse.

Blue Cross Blue Shield (BCBS) of Texas recently developed a new policy that would have patients pay the full costs of an emergency department visit if the encounter was later deemed non-emergent.

READ MORE: Do Medicaid Reimbursement, Admissions Produce Hospital Profit?

“Some of our members are using the emergency room (ER) for things like head lice or sprained ankles, for convenience rather than life-threatening issues,” BCBS of Texas said.

“Doing so not only drives up the cost, but also uses limited ER resources for conditions that are not serious or life-threatening. We want to make healthcare affordable for our members, and to do so, we have to be good stewards of their money.”

The insurer delayed implementation of the rule, but plans to hold patients accountable for their emergency department use by the fall of 2018.

Anthem BCBS and BCBS of Georgia have already implemented similar emergency department policies.

Healthcare stakeholders worry that placing the responsibility on patients may not be the best method for reducing emergency department use.

“For example, when a person wonders if his or her chest pain is indigestion or a heart attack, will HMOs now be allowed now to penalize that person if he or she seeks care only to learn the ailment is the lesser concern?” eighteen provider groups in Texas said in response to the BCBS of Texas’ policy. “Or whether head trauma caused a concussion? Or whether abdominal pain is constipation or actually a dangerous appendicitis?”

The New Jersey bill takes a different path to control emergency department spending and costs. The bill targets hospitals with hopes that the Medicaid reimbursement cap will encourage hospitals to steer patients to the most appropriate care setting.