A review of Milliman’s normative healthcare database indicates that nearly all of the recent increase in the cost of emergency rooms (ER) is due to significant increase in the prevalence of supporting services (laboratory, radiology, drugs, supplies, etc.) provided during while in the ER.
My study included claim and enrollment data for commercial (employer-sponsored and individual) coverage from 2007 through 2011. It revealed an annual rate of increase in allowed per member per month costs for ER of slightly over 10%, which is substantially above the inflation rate during that same period of time. Interestingly, the actual number of ER cases per 1,000 covered members decreased very slightly during that period of time, while the unit costs for the individual services provided as part of a typical ER case only increased 1% annually.
So, what caused the double-digit annual total cost increase?
It appears to be almost solely caused by an increase in the number of services provided during an ER case. My study shows that a patient is likely to receive 50% more services, as part of their ER visit, in 2011 than in 2007. 93% of these additional services are related to lab, drugs, IV therapy and radiology. Lab is most prevalent, with a 79% total increase in use from 2007 to 2011, but the unit cost of lab services decreased by about 25% during that same period. Combined drug and IV therapy prevalence rose 166% during the study period, but in this case, also experienced a marginal increase in unit cost. As a result, drug and IV therapy services explained nearly 35% of the total increase in ER costs. Finally, radiological services increased in prevalence per case by 22% during the period, and contributed 17% of the total increase in ER costs.
Further study might be necessary to understand the efficacy and value of the increase in these supporting ER services, and whether ER costs are continuing to increase in 2012 and in the future.
We’ve blogged before about emergency room cost and utilization. ER cost and utilization – or rather the reduction of ER cost and utilization – is a frequent topic of discussion and data analysis for healthcare payer organizations. A recent Milliman study found an annual increase in the allowed per member per month costs for ER of slightly over 10% between 2007 and 2011, which is substantially above the inflation rate during that same period of time. It was also found that during that period of time, the actual number of ER cases per 1000 members decreased very slightly while the unit costs for the individual services provided during the ER cases on increased 1% annually.
Healthcare organizations turn to the data to identify potentially avoidable emergency room events, especially those that could have been provided in a less expensive care setting. In a patient centered medical home (PCMH) reporting project performed by Milliman, ER utilization was one of several utilization targets. The analysis performed identified opportunities for cost reduction, such as identification of members who visit the ER frequently. This analysis also provided insight into access and care management issues by tracking the day of the week ER visits were occurring.
Data analytics is becoming more and more valuable throughout all functions within healthcare payer organizations. Another Milliman study looks at how care coordinators use data analytics for analysis of preventable ER visits by line of business.
Further detail on each of the mentioned studies may be found at:
Identification of the right patients to include in care management programs can be a challenge for health organizations. It can be difficult to identify which patients are most likely to benefit from inclusion in these programs, while also effectively using limited care management resources to achieve the greatest impact.
Diane Laurent, Managing Director of the Milliman Advanced Risk Adjusters (MARA) product group, and Patty Jones, registered nurse and healthcare management consultant, presented a webinar on January 9, 2013, focusing on case management tools available from Milliman MedInsight. During the webinar, the presenters reviewed the Member Opportunity Scoring System, a new tool that consolidates a robust array of patient-focused data. The presentation also included case studies demonstrating how to highlight and prioritize opportunities for care management intervention.
If you missed the webinar and would like to view it, you can access a recording at: MedInsight: Identifying High-Risk Patients for Care Management
. To listen to the webinar, click on the “Register” button, enter the requested information, and click “Complete Registration.” The webinar will then automatically stream to your computer.