Emergency departments complain of lack of insurance compensation

When people have trauma or severe physical symptoms, they often head to the nearest hospital emergency department for treatment. Because of that, emergency departments have become the backbone of America’s medical safety net.

However, these EDs are facing severe financial and operational headwinds that could undermine their ability to provide care to millions of patients, according to a newly released report from RAND Corporation, backed by the Emergency Medicine Policy Institute.

The study, which focuses on widening cracks in the current payment structure for emergency care, reveals that declining reimbursements, rising operational costs, and a surge in uncompensated care are pushing many emergency physician groups – particularly independent practices – to the brink of financial instability. If left unaddressed, experts warn, these challenges could result in fewer emergency departments, longer wait times, and reduced access for vulnerable populations.

Rising demands, shrinking payments

Emergency physicians treat all patients, regardless of insurance status or ability to pay, under the Emergency Medical Treatment and Labor Act, a federal mandate. Despite representing just 4% of the physician workforce, they provide nearly two-thirds of all acute care for uninsured individuals.

Yet the economic realities paint a grim picture. Between 2018 and 2022, in-network payments from commercial insurers declined by 10.9%, while out-of-network payments fell by nearly 48%. Payments from Medicare and Medicaid fell by 3.8% during the same period. 

At the same time, 20% of expected payments for emergency care go unpaid, adding up to a staggering $5.9 billion in uncompensated services annually.

“In 2024, ED visit numbers almost reached prepandemic numbers nationally, with a consistent rise between 2020 and 2024,” the authors wrote. “Patient complexity is on the rise, with EDs managing patients with complex medical and social needs.”

Insurers under scrutiny

The report also shines a spotlight on what it describes as “bad payer behavior,” pointing to tactics such as delayed or denied reimbursements and systemic underpayment by insurers. These practices, the authors argue, erode the financial viability of emergency departments and increase the risk of closures or forced acquisitions by larger health systems.

Patrick Velliky, chair of EMPI, warned that unchecked consolidation and insurer misconduct could lead to dire consequences. He warned that these practices threaten the survival of emergency departments and the patients that rely on them for care when it’s needed most.