3 alternative payment models that may work in the ER

Photo credit: Getty/Nils Versemann

As more hospitals and healthcare facilities move away from a fee-for-service model, they may find it difficult to apply alternative payment models to the emergency department, frequently a safety net for patients who may be uninsured or unable to pay for care.

The ED also presents challenges because emergency care isn't set up to follow patients after discharge, which makes it difficult for organizations to obtain a full grasp on care costs, according to new study published in the American Journal of Managed Care. Furthermore, ER doctors may order a large number of tests to rule out life-threatening conditions for patients, so payment reform may lead to misdiagnoses as care patterns change, study authors note. 

Despite the unique challenges the ED presents to payment reform, the report’s authors examine how payment models under the Department of Health and Human Services' four-category framework could work. In addition to using the existing fee-for-service model, they suggest that organizations could:

  • Connect the fee-for-service model to quality benchmarks. In this model, according to the study, EDs would still operate under a fee-for-service system, but they could earn additional payments by achieving certain goals, like improving patient satisfaction or better care coordination. Being paid directly for coordination of care can lead to better outcomes and lower costs, according to the study.
  • Build a new payment model based on fee-for-service. One way this could work is for providers to establish frequent use programs, which cut costs by personalizing plans for patients with more complex medical, psychological and social needs. EDs could also offer bundled payments for more episodic conditions, which may reduce both costs and unnecessary readmissions, according to the study.
  • Create a population-based payment system. Under this model, ED providers would be payed a fixed sum based on local population, previous emergency care use or projected costs across a certain window of time. Basing payments around population gives incentives to providers to address inefficient care and to prevent unneeded ER visits for acute care,

Emergency physicians will be crucial in developing the best alternative payment models for the ED, according to the study, and they should provide insight to the Centers for Medicare & Medicaid Services on how to best proceed. 

- here’s the study