When Brittany Tesso鈥檚 then-3-year-old son, Roman, needed an evaluation for speech therapy in 2021, his pediatrician referred him to Children鈥檚 Hospital Colorado in Aurora. With in-person visits on hold due to the COVID-19 pandemic, the Tessos met with a panel of specialists via video chat.
The specialists, some of whom appeared to be calling from their homes, observed Roman speaking, playing with toys, and eating chicken nuggets. They asked about his diet.
Tesso thought the $676.86 bill she received for the one-hour session was pretty steep. When she got a second bill for $847.35, she assumed it was a mistake. Then she learned the second bill was for the costs of being seen in a hospital 鈥� the equipment, the medical records, and the support staff.
鈥淚 didn鈥檛 come to your facility,鈥� she argued when disputing the charges with a hospital billing representative. 鈥淭hey didn鈥檛 use any equipment.鈥�
This is the facility fee, the hospital employee told her, and every patient gets charged this.
鈥淓ven for a telehealth consultation?鈥� Tesso laughed in disbelief, which soon turned into anger.
Millions of Americans are similarly blindsided by hospital bills for doctor appointments that didn鈥檛 require setting foot inside a hospital. Hospitals argue that facility fees are needed to pay for staff and overhead expenses, particularly when hospitals don鈥檛 employ their own physicians. But consumer advocates say there鈥檚 no reason hospitals should charge more than independent clinics for the same services.
鈥淚f there is no change in patient care, then the fees seem artificial at best,鈥� said , a Johns Hopkins University health economist.
At least eight states agree such charges are questionable. They have implemented limits on facility fees or are moving to clamp down on the charges. Among them are Connecticut, which already , and Colorado, where lawmakers are considering a similar measure. Together, the initiatives could signal a wave of restrictions similar to the movement that to ban surprise bills, which took effect last year.
鈥淔acility fees are simply another way that hospital CEOs are lining their pockets at the expense of patients,鈥� said , the Denver Democrat who sponsored the Colorado bill.
Generally, patients at independent physician clinics receive a single bill that covers the physician鈥檚 fee as well as overhead costs. But when the clinic is owned by a hospital, the patient generally receives separate bills for the physician鈥檚 fee and the facility fee. In some cases, the hospital sends a single bill covering both fees. Medicare reduces the physician鈥檚 payment when a facility fee is charged. But private health plans and hospitals don鈥檛 disclose how physician and facility fees are set.
Children鈥檚 Hospital Colorado officials declined to comment on the specifics of Tesso鈥檚 experience but said that facility fees cover other costs of running the hospital.
鈥淭hose payments for outpatient care are how we pay our nurses, our child life specialists, or social workers,鈥� Zach Zaslow, senior director of government affairs for Children鈥檚 Hospital said in a February call with reporters. 鈥淚t鈥檚 how we buy and maintain our imaging equipment, our labs, our diagnostic tests, really all of the care that you expect when you come to a hospital for kids.鈥�
Research suggests that when hospitals acquire physician practices and hire those doctors, the physicians鈥� professional fees go up and, with the addition of facility fees, the total cost of care to the patient increases, as well. Other factors are in play, too. For instance, health plans pay the rates negotiated with the hospital, and hospitals have more market power than independent clinics to demand higher rates.
Those economic forces have driven consolidation, as hospital systems gobble up physician clinics. According to the , 3 in 4 physicians are now employed by hospitals, health systems, or other corporate entities. And less competition usually leads to higher prices.
One that prices for the services provided by physicians increase by an average of 14% after a hospital acquisition. that billing for laboratory tests and imaging, such as MRIs or CT scans, rise sharply after a practice is acquired.
Patients who get their labs drawn in a hospital outpatient department are charged up to three times what they would pay in an office, Sen said. 鈥淚t鈥檚 very hard to argue that the hospital outpatient department is doing that differently with better outcomes,鈥� she said.
Hospital officials say they acquire physician practices to maintain care options for patients. 鈥淢any of those physician practices are not viable and they were having trouble making ends meet, which is why they wanted to be bought,鈥� said Julie Lonborg, a senior vice president for the .
Along with Colorado and Connecticut, other states that have implemented or are considering limits on facility fees are , , New Hampshire, Ohio, , and . Those measures include collecting data on what facility fees hospitals charge, prohibiting add-on fees for telehealth, and requiring site-neutral payments for certain Medicaid services. A introduced in 2022 would require off-campus hospital outpatient departments to bill as physician providers, eliminating the possibility of charging facility fees.
Connecticut has gone the furthest, banning facility fees for basic doctor visits off-campus, and for telehealth appointments through June 2024. But the law鈥檚 application still has limitations, and with rising health care costs, the amount of facility fees in Connecticut continues to increase.
鈥淚t hasn鈥檛 changed much, partly because there鈥檚 so much money involved,鈥� said , who heads the state鈥檚 Office of the Healthcare Advocate. 鈥淭hey can鈥檛 just painlessly take that needle out of their arm. They鈥檙e addicted to it.鈥�
The Colorado bill would prohibit facility fees for primary care visits, preventive care services that are exempted from cost sharing, and telehealth appointments. Hospitals would also be required to notify patients if a facility fee would apply. The ban would not apply to rural hospitals. The bill was scaled back from a much broader proposal after criticism from hospitals about its potential consequences.
Rural hospital executives, like , CEO of Lincoln Health, a small community hospital in the eastern Colorado town of Hugo, had been particularly worried about the impact of a fee ban. The state hospital association estimated his hospital would lose as much as $13 million a year if facility fees were banned. The 37-bed hospital鈥檚 netted $22 million in patient revenue last year, resulting in a loss. It stays open only through local taxes, Stansbury said.
鈥淭his will still harm access to care 鈥� and especially essential primary and preventive care that is helping Coloradans stay healthier and out of the hospital,鈥� Lonborg said of the revised approach. 鈥淚t will also have a detrimental impact on access to specialty care through telehealth, which many Coloradans, especially in rural parts of the state, have come to depend on.鈥�
The Colorado bill presents particular challenges for health systems such as UC Health and Children鈥檚 Hospital, which rely on the University of Colorado School of Medicine for staffing. For outpatient appointments, the medical school bills for the doctor鈥檚 fee, while the hospital bills a facility fee.
鈥淭he professional fee goes solely to the provider, and, very frequently, they鈥檙e not employed by us,鈥� said Dan Weaver, vice president of communications for UC Health. 鈥淣one of that supports the clinic or the staff members.鈥�
Without a facility fee, the hospital would not receive any payment for outpatient services covered by the ban. Weaver said the combination of the clinicians鈥� and facility fees is often higher than fees charged in independent clinics because hospitals provide extra services that independent physician clinics cannot afford.
鈥淧rohibiting facility fees for primary care services and for telehealth would still cause significant problems for patients throughout our state, forcing some clinics to close, and causing patients to lose access to the care they need,鈥� he said.
Backers of the Colorado bill disagree.
鈥淭he data on their costs and their revenue paints a little different picture of their financial health,鈥� said , policy manager for the Colorado Consumer Health Initiative, which backs the bill.
From 2019 through 2022, UC Health had a net income of $2.8 billion, including investment gains and losses.
The Colorado market is dominated by large health systems that can dictate higher rates to health plans. Plans pass on those costs through higher premiums or out-of-pocket costs.
鈥淯nless the employers and patients that are incurring the prices are raising the alarm, there really isn鈥檛 a strong incentive for health plans to push against this,鈥� said , a health care economist with the nonprofit think tank Rand Corp.
Consumer complaints helped pave the way for the federal , which protects against unanticipated out-of-network bills. But far more people get hit with facility fees 鈥� about half of patients compared with 1 in 4 hospital patients who receive surprise bills, Whaley said.
, a University of Michigan health policy professor, said facility fees are also generally surprises but don鈥檛 fall under the definition of the No Surprises Act. And with the rise of high-deductible plans, patients are more likely to have to pay those fees out-of-pocket.
鈥淚t falls on the patient,鈥� Fendrick said. 鈥淚t鈥檚 a tax on the sick.鈥�
Tesso held off paying the facility fee for her son鈥檚 visit as long as possible. And when her pediatrician again referred them to Children鈥檚 Hospital, she called to inquire what the facility fee would be. The hospital quoted a price of $994, on top of the doctor鈥檚 fee. She took her son to an independent doctor instead and paid a $50 copay.
(Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.