In the first part of WPSU's series on facility fees, we explained what a facility fee is and why this charge for overhead costs in hospitals is now spreading to medical offices.
In this second story of our three-part series, WPSU reports on the arguments for and against facility fees.
The spread of facility fees
Several offices in the State College area are now charging facility fees, which often are not communicated ahead of time and can cost hundreds of dollars.
“As hospitals have started acquiring physicians' practices, then the facility fees in the physicians’ practices have followed," said Allison Hoffman, who researches health care law and policy at the University of Pennsylvania in Philadelphia.
Last year, Geisinger expanded its Gray’s Woods and Scenery Park facilities in State College. The locations became “hospital outpatient clinics” of the Geisinger Lewistown Hospital.
That hospital is about 40 minutes away in Mifflin County, but hospital officials say these facility fees bring more specialists and “the latest technologies" to the communities Geisinger serves.
Hospitals say they need the fees to survive
Advocates for facility fees often say they help offset low Medicare and Medicaid reimbursement rates, according to Hoffman.
“They would argue that the doctor's bill, like the professional fee, isn't paying enough to pay for the costs of running that practice and for that building that the doctor’s in," Hoffman said. "And so you need to have a facility fee component to help to pay for that.”
That’s exactly what Molly Smith with the American Hospital Association argued to PBS NewsHour in a story on facility fees last April.
“For every dollar that a hospital spends on staff, on medical supplies, Medicare only reimburses them 82 cents," Smith said. "They have to make up that other 18 cents somewhere else.”
More than a dozen hospitals in Pennsylvania could be at risk of closing over the next five years because of the gap between reimbursements and the cost of the care. That’s according to a January report released by the Hospital and Healthsystem Association of Pennsylvania, or HAP.
HAP, Geisinger and the American Hospital Association all declined interviews with WPSU for this story – and Mount Nittany, which is also charging facility fees, did not respond to a request for an interview. But they all answered some questions or gave us written statements.
In Smith’s interview with PBS, she said hospitals need this money to stay “financially stable.”
“I do think everyone needs to understand what it takes for hospitals and health systems to maintain access to care in their communities 24 hours a day," Smith said. "When you need your emergency department in the middle of the night, you need it to be open and available.”
In Washington D.C., Congress has introduced bills that would limit the ability of hospitals to charge facility fees. In a fact sheet posted online, the American Hospital Association says depending on which proposals are adopted, hospitals could lose anywhere from $3 billion to $180 billion dollars over 10 years.
Patients want pricing transparency
Several people who reached out to WPSU with their personal stories about facility fees said they wish hospitals would at least be transparent about when and where they’re charging these fees.
Beth Philips said she talked with Geisinger’s billing department on the phone about her $205 dollar facility fee.
“Why was I not given a choice as to whether I wanted to do this or not?" Philips said she asked the Geisinger representative. "And she said, ‘Well, it's posted in the facility.’"
Geisinger has signage in its Scenery Park and Gray’s Woods locations saying they’re affiliates of the Geisinger Lewistown hospital, and there are pamphlets that explain patients could get separate "hospital-based outpatient billing."
Patients at Gray’s Woods and Scenery Park also have to sign an electronic form at check-in, which now includes a notice about potential facility fees. That notice says patients can request an estimate.
Meira Minard signed that form at Gray’s Woods when she was there for a rheumatology appointment, assuming it was the normal HIPAA agreement.
“I will admit that because I’ve signed these forms a million times, you know, I just signed it. I just signed it not thinking that I was signing up for this facility fee, because I wouldn’t have done it," Minard said.
How are other states addressing facility fees?
Other states have introduced restrictions on facility fees, including Ohio, Texas, Florida and Connecticut. Hoffman, with the University of Pennsylvania, said other states have gone three different routes.
“They've banned these fees, a few states have, for certain kinds of care, like a primary care visit. Some have said if you're going to charge them, you have to tell people ahead of time," Hoffman said. "Some have said you can charge them, but you can only charge so much to the patient for their out-of-pocket costs.”
There are no nationwide restrictions on facility fees, but some states do have one. In Connecticut, providers cannot bill patients a facility fee higher than their insurer’s negotiated rate.
Hoffman says Pennsylvania lawmakers are considering regulating facility fees, as more people are seeing these extra charges.
“People are taking notice. And as they take notice, we're starting to see policy makers follow," Hoffman said.
In the next part of our series on facility fees, we’ll look into where those legislative efforts stand in Pennsylvania, and how you can appeal a bill.
