State lawmakers target fees charged by hospital-owned clinics

More than two years after Congress acted to protect patients from surprise medical billslegislators are turning to another source of unexpected medical costs: the fees hospitals charge for services provided at clinics they own.

Why is this important: As health systems push more care outside hospital walls, they’re charging extra “facility fees” for common services like blood tests, x-rays and, in some cases, even telehealth visits.

• Critics say the practice drives up health care costs while boosting hospital profits and prompting greater consolidation. But hospitals argue that the fees cover the cost of nurses, lab technicians, medical records and equipment – and that limiting them could reduce patient care.

Driving the news: The charges have caught the attention of Congress, which could take price transparency legislation.

But five states are currently considering laws to reduce facility fees for certain services or strengthen existing laws, depending on the National Academy for State Health Policywho proposed model legislation.

• Connecticut is updating a 2015 law that required notifications when a facility fee was charged by hospitals.
• “Rising costs remain a barrier for far too many people and lead many people to put off care because they can’t afford it,” Deidre Gifford, executive director of the Connecticut Office of Health Strategy, said last month. , when Democratic Governor Ned Lamont proposed a reform package.
• Colorado lawmakers target the practice, despite growing resistance from hospitals, Kaiser Health News reported.
• And Texas lawmakers are weighing bans on off-campus fees — a move the Texas Hospital Association calls “unprecedented and dangerous.”
• Lawmakers in Indiana and Massachusetts are considering similar measures.

How it works: Many health services can be provided both in hospital and outpatient settings. But some patients who visit an offsite clinic are billed as if they had been treated in hospital.

• Some may receive a facility fee if they have not yet reached their health plan’s deductible. Others might see the added cost later reflected in higher premiums and copayments.
• A 2020 Rand report facility found and related professional costs considered in employers and private insurers paying 224% of what Medicare would have paid for the same services at the same facilities.

Some business groups like the Indiana Employers’ Forum advocate bans or moratoriums on fees, citing the increased cost of providing competitive benefits.

The other side: Hospitals argue that facility fees are necessary to cover critical infrastructure such as electronic health record systems and other overhead costs. Some call them “personal expenses,” saying they cover the expenses of nurses, lab technicians, pharmacists, and other essential staff.

• Texas hospitals are concerned about what they say is the broad definition of facility fees in pending legislation in the state Senate, saying he could eliminate all hospital payments in addition to those going to doctors.

• “We need to quantify the problem we’re trying to solve,” said Cameron Duncan, vice president of advocacy at the Texas Hospital Association.
• The group said the bill as originally introduced would cause 69% of Texas hospitals to close in their outpatient clinics.

The plot: Insurers that negotiated covered costs with hospitals and health systems stayed mostly quiet on fees.

• And the vagaries of hospital pricing mean that transparency requirements alone may not warn patients of additional charges.
• “It’s not clear from the data that the fees are consistent, or that you could decipher that the fees are consistent for each type of procedure,” said Vicki Veltri, senior policy officer at the National Academy for State. Health Policy and former Connecticut leader. Health Strategy Office.

The bottom line: Patients are increasingly being billed as if they were in a hospital, even if they haven’t set foot there, as doctors’ offices are increasingly taken over by massive healthcare systems.

• While these healthcare systems tout access and efficiency to reduce healthcare costs, facility fees are pushing more lawmakers and regulators to do a reality check.