Freestanding Emergency Departments: Same Issues, Different Tack

March 13, 2018
Legislation and Policy

UPDATE, March 16: All three freestanding emergency department bills passed out of the House Health, Insurance and Environment Committee on Thursday night, March 15. The consumer transparency bill (Senate Bill 146) passed 11-2 and now goes to the Finance Committee. The data reporting bill (House Bill 1282) passed 12-1 and now goes to the full House. And the licensure bill (HB 1212) passed 8-5 — with all Democrats and one Republican in support — and is headed to the Finance Committee. 

Freestanding emergency departments (EDs) have become a common sight in many Front Range communities. Colorado is now home to 50 freestanding EDs, making our state a national leader: Only Ohio and Texas have more.

While freestanding EDs can offer more convenient access to emergency medical care, some consumers and policymakers are concerned that they are too expensive and leave patients with big — and unexpected — medical bills.

For the third year in a row, Colorado’s legislature is considering bills targeting the state's growing number of freestanding EDs. In the past, all of the bills have failed, but this year, legislators are taking a different tack.

Freestanding EDs offer 24-hour emergency care like traditional hospital EDs. They don’t have all of the services found at the largest and most sophisticated hospital-based EDs, but they do offer greater convenience because they can be located in neighborhoods that don’t have a traditional hospital. Freestanding EDs are usually owned or affiliated with a hospital, but some operate independently.

Last year’s bill, Senate Bill (SB) 17-064, would have created a new type of license for freestanding EDs and imposed requirements such as greater up-front transparency of costs. It also proposed some more aggressive measures, such as a two-year moratorium on new freestanding EDs and a requirement that freestanding EDs provide urgent care services on-site — and at lower rates — to patients who needed urgent care rather than  emergency care. That bill was sent straight to the Senate’s “kill committee” (State, Veterans and Military Affairs), where it failed.

This year, several bills have been introduced, and the controversial moratorium provision has been dropped.

The first, SB 146 focuses on increasing transparency of prices so that consumers can make more informed decisions about where to seek care. (See Deborah Goeken’s recent blog for more detail about this proposal.)  A second, House Bill (HB) 1212, creates a new license for freestanding EDs. And a third, HB 1282, requires these facilities to identify themselves separately from a hospital when seeking reimbursement from insurance carriers. According to the bill’s sponsors, this would provide data showing the billing price for care in traditional hospital EDs versus freestanding EDs.

All three bills have sponsors from both sides of the aisle. That was not true of the 2017 effort, which was supported mainly by Democrats. Among the seven legislators sponsoring at least one of the bills are Sen. John Kefalas (D), who has carried similar legislation in prior sessions, and Sen. Jim Smallwood (R), who has worked in the health insurance industry and is chairman of the Senate Health and Human Services Committee.

New Bipartisan Support

Splitting the freestanding ED legislation into separate bills may allow legislators to support one of the bills even if they don’t like the others. So far, the Senate has passed SB 146, the pricing transparency bill, with bipartisan support and sent it on to the House. All three bills will be discussed Thursday, March 15, in the House Health, Insurance and Environment Committee.

The licensure bill, HB 1212, contains one of this year’s more contentious provisions related to freestanding EDs. It authorizes the Colorado Department of Public Health and Environment (CDPHE) to limit the facility fee that freestanding EDs can charge. Hospitals charge a facility fee — beyond the cost of a physician’s services, diagnostic tests or other medical care — to cover their general operating expenses or overhead. But freestanding EDs critics point out that these facilities don’t have the same expenses or the full range of services as a traditional hospital. They argue that facility fees for freestanding EDs should be lower than hospital facility fees. Hospital administrators, however, say the fees charged by freestanding EDs are necessary to equip their facilities to handle emergency situations and higher levels of care.

If the licensure bill becomes law, freestanding ED facility fees will be limited to “the costs reasonably related to the operating expenses” of individual freestanding EDs — not of the hospitals that may own or be affiliated with them. Freestanding EDs will have to provide data on their facility fees and overhead costs, and if the state determines that the fees are excessive, CDPHE could fine them or take other actions.

CHI will continue to monitor the progress of the legislation. While one bill may soon be nearing the finish line, the other two still have many hurdles to clear.

Find Edmond Toy on Twitter: @CHI_EdmondToy

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