'Facility Fees' Are Taking Many Patients by Surprise
Published: 2009-10-21 15:38:15
Author: Sandra G. Boodman | Washington Post | October 6, 2009
Kathy Young, the veteran benefits administrator for a large plumbing supply company headquartered in Madison, Wis., is well versed in the often fiendish complexities of medical bills.
But when Young, 54, received a $25.59 bill for a "facility fee" separate from the $207 physician's charge for a recent routine eye exam, she called her health plan for an explanation. Young was told the fee was a "room charge" -- an item she might not have noticed previously.
Baffled, she reviewed two years of paperwork and found that the fee hadn't appeared until this year. "Why am I paying for it?" she asked. "And why wasn't I told when I made the appointment?"
Similar complaints are occurring more often, consumer advocates across the country say, because patients increasingly are being charged the fees, the result of an obscure change in Medicare rules that occurred nearly a decade ago. Called "provider-based billing," it allows hospitals that own physician practices and outpatient clinics that meet certain federal requirements to bill separately for the facility as well as for physician services. Because hospitals that bill Medicare beneficiaries this way must do so for all other patients, facility fees affect patients of all ages. Doctors' offices owned by physicians and freestanding clinics are not permitted to charge them.
Unlike other add-ons that have aroused public ire -- baggage charges on airlines, surcharges for concert tickets or resort fees tacked on by hotels -- outpatient facility fees, which range from about $25 to hundreds of dollars per visit, may involve a service that is a matter of life and death, such as chemotherapy.
"It seems like a lot of people's insurance [plans] are no longer covering the facility fees" as they did previously and that hospital-owned practices have proliferated, said Richard Gundling, vice president of the Healthcare Financial Management Association, an industry group representing financial executives.
One billing consultant has estimated that the fees could generate an additional $30,000 annually per physician for hospitals.
Hospital executives say revenue from these fees is necessary to help defray their overhead, pay salaries and meet stringent standards set by the federal government and inspectors, requirements that do not apply to their competitors.
Critics vehemently disagree. They regard the fees as disguised price increases that ratchet up the cost of care at a time consumers can least afford it. Many say that facility fees underscore the urgent need for transparency in pricing for medical services and exemplify the relentless cost-shifting that is driving more Americans into medical debt and bankruptcy. It is common for facility fees to be applied to an insurance plan's hospital deductible, which can be thousands of dollars higher than a physician deductible.
To Alan Sager, a professor of health policy and management at the Boston University School of Public Health, facility fees are "a tax on sick people" and reflect the "financial anarchy that pervades health care in the U.S."
"They are the latest gimmick to generate additional revenue for
hospitals," whose profit margins have sagged in the past two years as
the economy has nosedived, Sager said.