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

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.

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.

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.

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.