Understanding University Hospital Facility Fee Charges

University hospitals, like other hospitals, charge facility fees to cover the costs of delivering patient care, including equipment, nursing staff, and building maintenance. These fees are separate from professional fees, which cover the cost of physicians providing care. Facility fees can range from a few dollars to over a thousand, and patients may receive separate bills for facility and professional fees. While some outpatient clinics and services are exempt from facility fees, hospitals often acquire smaller clinics and turn them into outpatient departments, allowing them to charge facility fees. As a result of rising fees and patient costs, some states have passed laws to increase transparency and restrict facility fees.

Hospitals must disclose fees

Hospitals are required to disclose their fees, thanks to new regulations that came into effect on January 1, 2021. This is to ensure hospital price transparency, which helps Americans know the cost of a hospital item or service before receiving it. The regulation requires hospitals to post pricing information on their websites, in a comprehensive machine-readable file with all items and services, and in a consumer-friendly format. This makes it easier for consumers to compare prices across hospitals and estimate the cost of care in advance.

However, some hospitals have been criticized for burying this pricing information on their websites, making it challenging for patients to find. Additionally, hospitals have some flexibility in deciding which services to include in their price disclosures beyond the required 70 services outlined by CMS. These fall into four categories: evaluation and management, laboratory and pathology, radiology, and medicine and surgery. The last category includes a wide range of procedures, such as cataract surgery, electrocardiograms, and gallbladder removal.

Despite these efforts to increase transparency, patients may still encounter unexpected fees, such as facility fees, which are not always disclosed upfront. These fees can range from a few dollars to a thousand dollars and are intended to cover the costs of delivering patient care, including equipment, staff, and infrastructure maintenance. While facility fees are common, they are not universal, and some hospitals do not charge them for medical office visits.

It is worth noting that hospital bills typically consist of two types of expenses: professional fees and facility fees. Professional fees cover the cost of the physician providing care, while facility fees encompass everything else, including direct and indirect costs that enable hospitals to provide comprehensive care to patients and serve their communities. In some cases, facility fees may also be used to subsidize physician practices when Medicare and commercial payers compensate physicians below the cost of delivering care.

Facility fees subsidise physician practices

Hospitals charge "facility fees" for care provided in outpatient and physician office settings that they own or control. These fees are ostensibly overhead charges, but for the hospitals and health systems that own these practice settings, the fees are not necessarily intended to cover costs specific to the setting or the patient being charged. Facility fees cover everything else—both the direct and indirect costs that allow hospitals to continue to provide comprehensive care to patients and serve the needs of their communities. They include around-the-clock nursing and physician services, medical equipment, drug therapies, and maintaining critical building and community infrastructure.

Facility fees are the portion of a health care treatment bill that covers all the costs of delivering patient care, except for those billed by physicians and other professionals. Professional fees cover the cost of the physician providing the care. Hospital bills cover two types of expenses: professional fees and facility fees.

Facility fees are increasingly used to cover the true cost of providing physician services, which hospitals do by subsidizing physicians' pay above the underpayment they are reimbursed from both public and private payers. These payers have pushed physician compensation so low that many physicians have no choice but to either seek employment or require subsidies from the facilities in which they work. As both Medicare and commercial payers increasingly compensate physicians below the cost of delivering care, hospitals have needed to use a portion of facility fees to subsidize physician practices.

Facility fees can range from a couple of dollars to one thousand dollars, and they are often not disclosed until after the fact. They are part of the increased cost of healthcare, and depending on the location, they are a very fast-growing segment of that healthcare cost. The rise in fees and other patient costs springs from the growing consolidation of the American healthcare system, with large hospital systems acquiring clinics, physician groups, and urgent care and imaging centres.

Fees can range from $4 to $1000

Hospital facility fees are becoming increasingly common, with hospitals charging patients for routine services at smaller clinics and outpatient centres, even if these facilities are not located near the hospital campus. These fees can range from as little as $4 to as much as $1000, and are often not disclosed until after the patient has received treatment. This lack of transparency can result in unexpected charges on medical bills, which has caught the attention of state lawmakers who are seeking to implement changes.

Facility fees are separate from professional fees, which cover the cost of the physician providing care. These fees cover all other costs, including equipment, surgical trays, instruments, linens, nursing staff, and other support staff. They also help to subsidize physician practices, as Medicare and commercial payers often compensate physicians below the cost of delivering care. This is due to the consolidation of the American healthcare system, with large hospital systems acquiring clinics, physician groups, and urgent care centres.

While some states have passed laws to regulate facility fees, such as Indiana and Colorado, patients in other states may still be vulnerable to unexpected charges. It is important for patients to be aware of the potential for facility fees and to understand that they may receive multiple bills for a single treatment, including facility and professional fees. Patients can also seek financial assistance if needed to help cover these unexpected costs.

The impact of restricting facility fees could have consequences beyond the financial, as it may result in hospitals having to reduce or discontinue certain services. This could lead to a loss of access to critical healthcare services and a potential loss of jobs for healthcare workers. However, policymakers are considering policies to limit facility fees, particularly in the context of commercial coverage and Medicare hospital outpatient payments.

It is worth noting that not all hospitals charge facility fees, and patients have the option to choose alternative treatment locations that do not incur these fees. Additionally, patients can take proactive measures by inquiring about potential facility fees when scheduling appointments, although they may not always receive clear answers.

Routine services at smaller clinics

Facility fees are the portion of a healthcare treatment bill that covers all costs of delivering patient care, except for those billed by physicians and other professionals. These fees can range from a few dollars to thousands of dollars. Hospitals are increasingly charging facility fees for routine services at smaller clinics and outpatient centres they own, even if these facilities are not located near the hospital campus. This practice has been criticised for driving up the prices of doctor visits and adding unexpected charges to patients' bills.

In some cases, patients have reported being charged out-of-hospital facility fees of $503 for a paediatric visit, $488 for an appointment to obtain ADHD medication, and $355 for steroid injections for arthritis. These unexpected charges can be a significant financial burden, especially for those with high-deductible health plans or no insurance coverage. Moreover, employers are also impacted by the rising costs of their employees' health insurance.

To address this issue, some states have taken steps to regulate facility fees. For example, Colorado, Connecticut, and New York have banned facility fees for certain outpatient services at non-hospital locations or for telehealth visits. Other states, such as Florida, Louisiana, Minnesota, and Texas, now require hospitals to notify patients about facility fees ahead of time. Additionally, Indiana's 2023 healthcare bills increased reporting requirements for hospitals charging facility fees, while Colorado passed a measure to prevent larger hospital systems from charging facility fees for preventive outpatient services.

The justification for facility fees is that they provide hospitals with the resources necessary to offer high-acuity services 24/7, such as emergency and trauma care. However, critics argue that the consolidation of the American healthcare system has led to large hospital systems acquiring smaller clinics and physician practices, resulting in higher fees and reduced competition. This, in turn, can limit patients' access to important care services, such as preventive screenings, virtual behavioural health appointments, and specialist consultations.

Patients can receive multiple bills

Facility fees are the portion of a healthcare treatment bill that covers all the costs of delivering patient care, except for those billed by physicians and other professionals. These fees can range from a few dollars to a thousand dollars and are often not disclosed until after treatment. They are typically charged for the use of hospital facilities, equipment, and staff support during a procedure or surgery.

In the United States, the Centers for Medicare and Medicaid Services (CMS) require hospitals to make public a listing of all standard hospital charges, including facility fees. However, patients may still be surprised by the facility fees they are charged, especially when they receive treatment at smaller clinics or outpatient centres affiliated with a large hospital system.

To address concerns about unexpected facility fees, some states have passed laws to increase transparency and reporting requirements for hospitals charging facility fees. For example, Maryland's Facility Fee Right-to-Know Act requires hospitals to provide patients with notifications and disclosures related to facility fees. Additionally, some proposals at the federal level aim to limit hospitals' ability to charge facility fees in the context of Medicare hospital outpatient payments.

It's important for patients to understand that they may be responsible for all charges associated with their care, including facility fees. While it can be challenging to predict the exact cost of facility fees in advance, patients can take steps to understand the potential costs by reviewing the hospital's published charges and seeking estimates for their specific treatment needs.

Frequently asked questions