The cost of observation care for commercially insured patients visiting the emergency department

Abstract

Objective: To examine trends in the use of ED observation stays among a national sample of patients with commercial insurance, and assess the patient cost-burden of an observation stay relative to an short inpatient hospitalization from the ED. Methods: Retrospective analysis of ED observation stays and inpatient hospitalizations from 2008 to 2015 using the Truven MarketScan® Commercial Claims and Encounters database. Index ED visits were identified from claims files and assessed for evidence of an observation or inpatient hospitalization. Total and out-of-pocket costs were calculated for the index hospitalization and a 30-day episode of care and standardized to 2015 $USD. Costs for ED patients with an observation stay were compared to a similar, propensity-matched cohort of ED patients hospitalized as inpatients. Results: Over the 8 year period, observation stay admissions increased from 4.3% to 6.8% of total ED visits (60.5% relative increase) while inpatient admissions fell from 10.8% to 8.9% (16.6% relative decrease). In 2015, the mean total cost was $8162 for an observation stay and $22,865 for an inpatient hospitalization. Patient out-of-pocket costs were $962 and $1403, respectively. Among the propensity-matched cohorts, relative mean costs for the index hospitalization were 41% higher and patient out-of-pocket costs were 33% higher if the patient was admitted as an inpatient from the ED versus observation during their hospitalization. Conclusions: Observation hospitalizations are an increasingly common disposition for patients entering the hospital through the ED. Both total and patient out-of-pocket costs are lower, on average, for an observation stay compared with a similar inpatient admission for ED patients requiring hospitalization.