Claire Dawson
Facility fees are a portion of a hospital treatment bill that covers the costs of delivering patient care, including 24/7 services, equipment, and utilities. While these fees are typically associated with inpatient hospital stays, they are becoming more common for outpatient appointments, even when patients have not set foot in a hospital. This is due to the growing consolidation of the American healthcare system, with large hospital systems acquiring clinics, physician groups, and urgent care centers, which then become outpatient departments of the hospitals. These fees can add significantly to a medical bill, and patients are often surprised by them, especially when they expect their insurance to cover most of the costs. While some states have passed laws to protect patients from these surprise charges, the American Hospital Association (AHA) argues that these fees are necessary to maintain services and cover the costs of treating sicker patients.
| Characteristics | Values |
|---|---|
| What are facility fees? | 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. |
| Why do hospitals charge facility fees? | Hospitals argue that facility fees are necessary to fund the higher level of care they provide at their outpatient doctors' offices and to maintain 24/7 services such as emergency rooms. |
| Who does it impact? | Patients, especially those with insurance plans that leave them paying more for care before coverage kicks in. |
| How much do facility fees cost? | Facility fees can add anywhere from $15 to $100 or more to a medical bill. |
| How to avoid facility fees? | Seek independent doctors or clinics not affiliated with a large hospital system, use outpatient imaging centers, utilize telemedicine, and compare prices across facilities. |
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What You'll Learn
- Hospitals charge facility fees to cover the costs of delivering patient care
- Facility fees are often charged even when patients haven't entered the hospital
- They are used to subsidize physicians' pay, which is often underpaid by payers
- The fees are becoming more common as hospital systems acquire more clinics
- Some states are introducing laws to protect patients from surprise facility fees
Hospitals charge facility fees to cover the costs of delivering patient care
Hospital bills cover two types of expenses: professional fees and facility fees. While professional fees cover the cost of the physician providing the care, facility fees cover everything else, including both direct and indirect costs that allow hospitals to continue providing comprehensive care to patients and serve the needs of their communities.
In recent years, facility fees have become more prevalent as more physicians are employed by hospitals, and insurance plans leave patients paying more for care before coverage kicks in. Hospital outpatient departments and affiliated physician offices are not the same as independent physician offices and other ambulatory sites of care. They care for sicker patients, treat a higher rate of uninsured patients, and must meet higher regulatory standards.
Facility fees are becoming more common as hospital systems acquire more clinics and outpatient practices, driving up the overall cost of outpatient care. Hospitals can charge facility fees even when a patient hasn't set foot in a hospital, as long as they own the clinic or office. These fees can add anywhere from $15 to $100 or more to a medical bill, and patients have reported being charged out-of-hospital facility fees ranging from $355 to $1,000 for various appointments.
While facility fees help hospitals cover the costs of delivering patient care, they can also catch patients off guard, especially when they expect their insurance to cover most of the costs. To avoid surprises, experts recommend asking about facility fees when booking an appointment and reviewing insurance coverage to understand potential out-of-pocket expenses.
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Facility fees are often charged even when patients haven't entered the hospital
Facility fees are a portion of a healthcare treatment bill that covers the costs of delivering patient care, including 24/7 services such as emergency and trauma care, medical equipment, drug therapies, and maintaining critical infrastructure. While these fees are typically associated with inpatient hospital stays, they are becoming more common for outpatient appointments, even when patients have not physically entered the hospital.
This trend is driven by the growing consolidation of the American healthcare system, with large hospital systems acquiring clinics, physician groups, and urgent care centers. These acquired facilities become outpatient departments of the hospitals, allowing them to charge facility fees for services provided at these locations. In some communities, it has become challenging to find practices that do not charge facility fees due to the dominance of large hospital systems.
Hospitals argue that facility fees are necessary to fund the higher level of care they provide at their outpatient facilities and to maintain 24/7 services. Additionally, as Medicare and commercial payers reimburse physicians below the cost of delivering care, hospitals use a portion of the facility fees to subsidize physician practices. However, critics argue that these fees unnecessarily inflate the cost of care and surprise patients with unexpected charges.
Patients have reported being charged facility fees ranging from $15 to over $400 for outpatient services, even when they have good insurance coverage. These fees are legal in many states, and insurance companies may not always cover them. To avoid unexpected charges, experts recommend asking about facility fees when booking appointments and reviewing insurance coverage to understand potential out-of-pocket expenses.
Some states, such as Indiana, Texas, and Colorado, have begun working on new laws to protect patients from surprise facility fee charges. These efforts aim to increase transparency, reporting requirements, and enforcement related to facility fees to prevent patients from being blindsided by unexpected charges for routine outpatient services.
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They are used to subsidize physicians' pay, which is often underpaid by payers
Facility fees are becoming more common as hospital systems acquire more clinics and outpatient practices, driving up the overall cost of outpatient care. These fees are often associated with inpatient hospital stays but are increasingly being charged for outpatient doctors' appointments. Hospitals argue that these fees are necessary to fund the higher level of care they provide at their outpatient offices and to maintain 24/7 services such as emergency rooms.
However, patients have expressed concerns and frustrations over these unexpected charges, which can add significantly to their medical bills. In some cases, patients have been charged facility fees even when they have not set foot in a hospital, simply because they visited a clinic or office owned by a large hospital system. This practice has been deemed legal in many states, and insurance companies may not always cover these charges.
The increasing prevalence of facility fees is partly due to the growing consolidation of the American healthcare system, with large hospital systems acquiring clinics, physician groups, and urgent care centers. This consolidation has made it challenging for patients to find practices that do not charge facility fees. Additionally, as Medicare and commercial payers increasingly reimburse physicians below the cost of delivering care, hospitals have had to use a portion of the facility fees to subsidize physician pay.
Physician compensation from payers has been pushed so low that many doctors have no choice but to seek employment or rely on subsidies from the facilities they work in. If restrictions are placed on the use of facility fees, hospitals may be forced to make difficult decisions to discontinue certain services, resulting in a loss of access to care for patients and job losses. Therefore, while facility fees can be a source of surprise and financial burden for patients, they also serve the critical purpose of subsidizing physician pay to ensure that essential healthcare services can continue to be provided to communities.
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The fees are becoming more common as hospital systems acquire more clinics
There are a number of reasons why hospital systems are acquiring more clinics. One reason is that hospitals are seeking to expand their market share and increase their patient volume. By acquiring clinics, hospitals can create a more integrated healthcare system, which can improve patient care and streamline operations. Additionally, acquiring clinics can help hospitals negotiate better rates with insurance companies and give them more leverage in contract negotiations.
Another reason for these acquisitions is the trend towards value-based care. Hospital systems are increasingly being incentivized to provide high-quality, cost-effective care, and acquiring clinics can help them achieve these goals. By integrating clinics into their system, hospitals can better coordinate patient care, improve health outcomes, and reduce costs. This can lead to lower readmission rates, shorter hospital stays, and more efficient use of resources.
The consolidation of healthcare providers is another factor contributing to the increasing prevalence of facility fees. As smaller clinics and practices are acquired by larger hospital systems, they often become subject to the same billing practices as the hospital. This includes charging facility fees, which may come as a surprise to patients who are used to the lower prices of a stand-alone clinic.
Finally, the rise of consumerism in healthcare has also played a role. With patients bearing an increasing share of their healthcare costs, they are becoming more price-sensitive and seeking out convenient, affordable options. By acquiring clinics in desirable locations, hospitals can offer patients more convenient access to care, often with extended hours and shorter wait times. However, this convenience may come at a cost, as patients may now be responsible for facility fees in addition to their regular medical expenses.
In conclusion, the trend of hospital systems acquiring more clinics is likely to continue, and with it, the prevalence of facility fees is expected to increase. While there are a number of benefits to this integration of clinics into hospital systems, patients should be aware of the potential for higher costs in the form of facility fees. Understanding the factors driving this trend can help patients navigate the complex landscape of healthcare pricing and make more informed decisions about their care.
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Some states are introducing laws to protect patients from surprise facility fees
Facility fees are an added charge that hospitals and health systems use to cover the costs of their buildings and staff. These fees are used to subsidize physicians' pay, which is often underpaid by public and private payers. Hospitals claim that these fees help them offer important services to everyone in need. However, in recent times, hospitals have been charging these fees even when patients have not entered their facility, leading to surprise facility fees. These surprise fees are a result of the growing consolidation of the American healthcare system, with large hospital systems acquiring clinics, physician groups, and urgent care and imaging centers.
Recognizing the burden that surprise facility fees place on patients, some states are taking action to protect their residents. Connecticut, for example, extended its COVID-era ban on facility fees for telehealth services and prohibited fees for simple non-emergency physician visits. Maine now requires healthcare claims to identify the physical location where a service was provided, including off-campus hospital locations, to understand better when facility fees are applied outside of a hospital. Maryland's Health Services Cost Review Commission is studying outpatient facility fee billing to expand notice requirements.
Indiana has also passed a law to address surprise facility fees and other dishonest billing tactics, limiting the use of hospital billing for services provided off a hospital's campus. Ohio and other states have banned facility fees for telehealth visits, and New York and Colorado have limited facility fees for preventive services. At the federal level, the Lower Costs More Transparency Act of 2023 addresses facility fees added for clinician-administered drugs, saving Medicare money and reducing copays.
While these laws aim to protect patients from surprise facility fees, some organizations, such as the American Hospital Association (AHA), argue that they will reduce funding for patient care and increase costs for healthcare providers. They assert that facility fees are necessary to maintain services and cover the costs of treating sicker patients.
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Frequently asked questions
Facility fees are the portion of a health care treatment bill that covers the costs of delivering patient care, except for those billed by physicians and other professionals.
Hospitals argue that facility fees are necessary to fund the higher level of care they provide at their outpatient doctors' offices and to maintain 24/7 services such as emergency rooms.
Facility fees are often associated with inpatient hospital stays but are becoming more common for outpatient doctors' appointments. Hospitals may also charge facility fees when a patient hasn't set foot in a hospital, such as when they own the clinic or office where the patient receives treatment.
Facility 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 get ADHD medication, and $355 for steroid injections for arthritis.
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