Methods for estimating the cost of treat-and-release emergency department visits

Abstract

Objective: To evaluate and compare approaches to estimating the service delivery cost of emergency department (ED) visits from total charge data only.

Data sources: The 2013-2017 Healthcare Cost and Utilization Project's (HCUP) State Emergency Department Databases (SEDD) and the Centers for Medicare and Medicaid Services Healthcare Cost Report Information System (HCRIS) public use files.

Study design: Compare a baseline approach (requiring cost-center-level charge detail) and four alternative methods (relying on total charges only) for estimating ED visit costs. Estimation errors are calculated after applying each method to a sample of ED visits, treating estimates from the baseline approach as the "true" cost. Performance metrics are calculated at the visit and hospital levels.

Data collection/extraction methods: The charges, revenue center codes, and patient/hospital characteristics were extracted from the SEDD. Detailed costs and charges were extracted from HCRIS public use files.

Principal findings: Baseline ("true") ED visit costs increased from $383 to $420 per visit between 2013 and 2017. Three methods performed comparatively well estimating mean cost per visit. The method using an overall cost-to-charge ratio (CCR) for all ancillary cost centers without regression adjustment (ANC-CCR) performed the worst, overestimating "true" costs by $63-$113 per visit. The other three methods, which used CCRs computed from selected cost centers, exhibited much smaller bias, with two of the methods yielding estimates within $2 of the "true" cost in 2017. Compared with ANC-CCR, the other three methods had more compact estimation error distributions. The estimated mean visit costs from all four methods have relatively small statistical variance, with 95% confidence intervals for mean cost in a hospital with 25,000 ED visits ranging between $4 and $7.

Conclusions: When cost-center-level charge detail for ED visits is unavailable, alternative methods relying on total ED charges can estimate ED service costs for patient and hospital segments.

Keywords: costs and cost analysis; direct service costs; emergency medical services; emergency service; fees and charges; hospital charges; hospital costs.