Egregious Physician and FSED Charges Raise Alarms
Freestanding emergency departments (FSEDs) have evolved from a niche access point in healthcare to a fast-growing sector. They operate in at least 32 states and saw a 75% growth rate ahead of the pandemic. Today, high concentrations of these facilities exist in states such as Texas, Arizona and Colorado.
But what does the spread of FSEDs mean for the overall cost of healthcare? In practice, FSED billing can resemble — and be priced like — a hospital emergency department even when treatment is relatively straightforward.
That’s why our audit team zoomed in on real physician and facility claims at FSEDs. We analyzed emergency medicine services reported/billed and the corresponding charges.
We focused on three questions:
- Are the physician and FSED really charging this much for emergency care?
- Is this a medical coding/billing/charge error?
- Are the physician’s and FSED’s charges egregious for the care provided and billed compared to their peers?
The Basics of FSEDs
FSEDs provide emergency medical services outside of a traditional hospital setting, offering 24/7 care for a range of medical conditions. They must meet structural, licensing, staffing and operational standards, which vary depending on their official designation. There are two distinct types of FSEDs:
- Hospital-based FSED — Operates off-campus under a parent hospital’s license, subject to the same regulations, including 24-hour operation and Emergency Medical Treatment and Labor Act obligations.
- Independent FSED (IFSED) — Operates independently of a hospital; may not be recognized by Medicare or Medicaid for facility fees (although they were allowed during the worst of COVID-19); and are subject to state licensing requirements.
Breaking Down the Separate Physician and Facility Costs
A physician providing medical care at an IFSED may bill separately from the facility for the medical care provided to the patient — underscored by these two sets of charges for the same incident of care.
$38,900 Physician Claim for Services at an IFSED
A 37-year-old patient presented with chest pain on breathing and received care at an IFSED in Texas. A physician claim (CMS-1500/electronic equivalent) was reported/billed for the following services (with corresponding Current Procedural Terminology codes):
- Emergency department visit (CPT code 99284): $9,500
- Professional interpretation of CT scan heart without dye (CPT code 75571-26): $25,000
- Professional reading of an EKG (CPT code 93019 59) x 2: $4,400
- Total physician charges seeing patient at IFSED: $38,900
The usual, customary and reasonable (UCR) physician charges for all the above services and locality is $1,789. The $25,000 charge for the physician interpretation of the CT scan appears to be a billing charge error, since the UCR charge for the physician interpretation/report of the CT scan is $75.
- Total charges: $38,900
- ClaimDOC pricing after audit: $209.34 (based on the 2026 Medicare Physician Fee Schedule with markup)
- Reduction: $38,690.66
- Percentage off billed: 99.4%
$36,786 IFSED (Facility) Claim
A facility claim (UB-04/electronic equivalent) was reported/billed for IFSED care as follows:
- Total charges (ED visit, hospital observation hours, CT thorax without dye, 18 laboratory tests, two EKGs, medication and administering the medication: $36,786.27
- ClaimDOC pricing after audit: $1,262.30 (based on Medicare with markup)
- Reduction: $35,523.97
- Percentage off billed: 97%
The Takeaway
We identified egregious billed charges in both claims for the same incident of care. While FSEDs and the physicians providing care at these facilities may charge any amount they choose, extreme fees and billing errors only complicate matters for members trying to understand their costs. This extra friction may make patient balances harder to collect, while facilities develop a reputation for high fees. Uninsured patients can face insurmountable costs.
The coding and billing of healthcare services is a complex process. Providers must support a rigorous compliance program to detect coding/billing errors prior to claim submission. Common claim errors include:
- Incorrect patient, provider and insurance information
- Incorrect CPT/HCPCS (Healthcare Common Procedure Coding System) codes
- Incorrect/missing modifiers
- Incorrect/missing codes for a diagnosis or procedure
- Incorrect quantity units
- Incorrect date of service
- Duplicate billing
- Unbundling of services
- Incorrect or egregious charges
When a healthcare bill appears inconsistent with the care received, members should request an explanation from the provider and/or health plan to confirm the services and associated charges.
A bill is not a verdict. It’s a claim, and claims should be verified.
Background
Our goal at ClaimDOC is to use benchmark charges and costs nationally to negotiate fair and ethical payments. Employers turn to us to establish fair reimbursement rates for their plans, allowing them to save money and provide richer benefits to their employees — a win-win for everyone.
ClaimDOC’s comprehensive line-by-line auditing of claims uncovers errors that basic claim repricing and auto-adjudication fail to catch, leading to greater savings for health plans and plan members. Our audit team analyzes all types of healthcare claims for a variety of potential concerns, including excessive usual and customary charges, duplication of claims, correct coding edits, unbundling of services, misuse of modifiers and numerous others. Our claims review is not intended to impact care decisions or medical practice.