BY: ANNA CLAIRE VOLLERS – APRIL 25, 2024 STATELINE
Even if you have health insurance, you may be charged a copayment for some routine care, such as exams and office visits. But you probably don’t expect to get a bill a few weeks later charging you an extra $100 or more.
That’s the situation a growing number of state lawmakers are looking to change. In most states, a hospital facility fee can legally appear on your bill if your doctor is affiliated with a large hospital system, even if you never set foot on the hospital campus.
Traditionally, hospitals and health systems add facility fees to help cover the higher costs of operating a full hospital, 24/7, which include expenses such as equipment, support staff, utilities, maintenance and security. They argue that the fees help them provide critical services to everyone, regardless of their ability to pay.
But increasingly, hospitals are absorbing facility fees for routine services in the smaller clinics and outpatient centers they have, even when those facilities are not located near the hospital campus. Fees can add anywhere from $15 to $100 or more to a medical bill. Patients have reported being charged out-of-hospital facility fees of $503 for a pediatric visit, $488 for an appointment to receive ADHD medication, and $355 for steroid injections for arthritis
Patients aren’t the only ones upset. Employers, horrified by rising health insurance costs for their employees, have joined states like Indiana and Texas in pushing lawmakers to do something.
Everything else in the provider office looks and feels the same, said Maureen Hensley-Quinn, senior director of the coverage, cost and value team at the nonprofit National Academy for State Health Policy .
But [patients] They end up with a larger bill for a service they previously obtained for a lower amount because the hospital now treats the provider’s office like a hospital outpatient department, he said.
Hensley-Quinn said state lawmakers began relaying constituents’ complaints to her organization about five years ago, and since then at least 15 states have taken steps to address facility fees. Some, including Colorado, Connecticut and New York, have banned facility fees for certain outpatient services at non-hospital sites or for telehealth visits. Those states, as well as others such as Florida, Louisiana, Minnesota and Texas, now require hospitals to notify patients of facility fees in advance.
In the most recent legislative sessions, at least 16 bills were introduced in 10 states to address the fees, Hensley-Quinn said.
Its big states, small states, very red states, very blue states, he said. Lawmakers across the country are raising these issues and asking questions about what greater consolidation means.
More chains, less independents
An increase in patient fees and other costs stems from the growing consolidation of America’s health care system, researchers and lawmakers say. Large hospital systems are gobbling up clinics, physician groups, and urgent care and imaging centers. These facilities can become outpatient departments of hospitals.
A study published last year illustrates why hospital systems are motivated to make these moves: In the early 2000s, the federal government began cutting Medicare payments to doctors for noninvasive heart tests performed in a cardiologist’s office, but kept their payments flat or increased them for the same tests if they were performed at an outpatient hospital center.
The researchers found that this dollar gap incentivized hospitals to acquire cardiology practices so they could move cardiac testing to outpatient facilities that could charge higher fees.
More than a dozen states have passed facility fee laws in the past few years alone, according to a recent report by the US Public Interest Research Group, a nonprofit advocacy organization focused on consumer protection issues.
The efforts have been largely bipartisan. Indiana’s 2023 health care bill package, which increased reporting requirements for hospitals that charge facility fees, was written by Republicans but passed with bipartisan support. That same year, Democratic lawmakers in Colorado passed a measure, with some Republican support, that prevents larger hospital systems from charging facility fees for preventive outpatient services.
Rates on the rise
Connecticut has the strongest facility fee laws in the country. Last year, lawmakers expanded existing law to prohibit fees for some routine outpatient services, even if performed on a hospital campus. The new law also strengthened state enforcement and created new reporting requirements for hospital systems.
Those fees are part of the rising cost of health care, said Connecticut state Sen. Saud Anwar, a Democrat and practicing physician who supported the new requirements. Facility fees, depending on location, are a very fast-growing segment of this health care cost. We are looking for ways to control it.
Hospital leaders say the fees help cover overhead costs. This allows them to maintain all the essential services they provide to their patients and communities, especially as Medicare and Medicaid continue to chronically pay hospitals for the costs of providing that care, wrote the American Hospital Association, a group commercial, in a statement to Stateline.
But prices for common outpatient services are significantly higher when delivered in a hospital-owned outpatient department compared to a doctor’s office or ambulatory surgery center, according to a 2023 analysis by Blue Health Intelligence, a division of Blue Cross Blue Shield Association. For example, a mammogram performed in an office setting may bill insurance for $232, but in a hospital-owned outpatient department, facility fees bring the total to $357.50. according to the report.
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These fees are part of the rising cost of health care. Facility fees are a very rapidly growing segment of this health care cost. We are looking for ways to control it.
Connecticut State Senator Saud Anwar, a Democrat and practicing physician
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And facility fees seem to be on the rise.
Bay State experience
Last year, the Massachusetts Health Policy Commission found that the largest increase in physician spending in Massachusetts’ commercial health care market was for hospital outpatient departments. Facility fees grew more than four times faster between 2019 and 2021 than physician/professional fees. The commission recommended lawmakers ban facility fees for common services, such as lab tests, basic imaging and diagnostic services, as well as doctor’s office visits.
In a 2020 study published in the journal Annals of Surgery, researchers found that facility fees for common outpatient procedures in the United States rose 53% between 2011 and 2017, while physician professional fees they remained stable. The increases were primarily driven by facility fees and out-of-pocket expenses.
From here to there
Not everyone is convinced that banning or restricting facility fees will curb rising health care costs.
Last year, Maine lawmakers considered a bill that would have banned facility fees for services not located on hospital campuses. Finally, they chose to create a task force to study facility fees.
The hospital association and other hospitals in the state came out strongly against the bill, basically saying that facility fees are a billing mechanism to cover their costs that all of their costs are they essentially incorporate into the rates of their facilities and that they would go bankrupt if they could not bill. for them, said Lisa Nolan, director of legislative affairs for the Healthcare Purchaser Alliance of Maine, one of the organizations involved in the task force.
Many rural hospitals and those serving low-income communities are struggling financially, in part because of inadequate payments from insurers, according to the Center for Healthcare Quality and Payment Reform, a policy organization national
More than 100 rural hospitals have closed across the country in the past decade, and nearly 700 rural hospitals are at risk of closing in the near future. Some hospital leaders argue that removing the ability to collect facility fees could cause struggling hospitals to go bankrupt.
Maines’ task force recommended that the Legislature consider restricting facility fees for certain services, including telehealth. However, many state lawmakers on the committee studying a new bill this year were not convinced. After some political wrangling, last month they passed a bill now awaiting the governor’s signature that would require health systems to notify patients of facility fees.
Nolan is skeptical that laws banning facility fees would significantly reduce costs for consumers or insurance companies.
Suppliers would find other ways to incorporate them into their bills, he said. There needs to be a debate about what the appropriate tariffs are, how providers can be more efficient and how we can reduce administrative costs for operators and providers.
Are some of these costs higher than they should be? This is a different discussion than removing facility fees.
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Anna Claire Vollers covers health care for Stateline. It is based in Huntsville, Alabama.
Stateline is part of States Newsroom, the nation’s largest nonprofit news organization.
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