In a recent blog post, I showed you how a doctor can increase his out-patient reimbursements simply by changing the ownership of the medical facility from which he delivers care. These additional charges are called facility fees and are “cash cows” for the new owners (hospitals). Facility fees drive up healthcare costs and are just one example of why Americans pay so much more for health care while getting so much less than do people in all other industrial nations.
Our government’s healthcare policy sends mixed signals when it demands that consumers shop for cost-effective care while encouraging hospitals to buy medical practices so they can reap facility fee reimbursements. As healthcare consumers, we are powerless to directly affect the mixed-signal, political machinations that define our government’s healthcare policy, but we can register our disapproval of facility fees (and high unaffordable healthcare costs) by avoiding doctors who include them in their bills.
How Facility Fees Drive Up Healthcare Costs
I will use the bills from two separate dermatologists to illustrate how facility fees drive up healthcare costs into the outrageously unaffordable realm that is our American healthcare system. Mick’s dermatologist is “affiliated” with a medical college/hospital and his services were reimbursed through a private employer-sponsored health insurance plan. For a dermatological examination of suspicious (cancerous?) lesions and simple “freezing off” of three lesions on his head, Mick and his health insurance plan paid $1267. After paying a copay of $20, a summary of the insurance company reimbursements s are shown in the table below. The total facility fees charged (highlighted in yellow) amounted to $797 (63% of the total payments made!).
Most patients do not even know they are paying extra hospital facility fees because they are not labeled as facility fees. Facility fees are “hidden” from consumers through medical coding. You can tell you are paying facility fees when you see duplicate charges with the same medical codes. My private health insurance company does not include medical codes on the Explanation of Benefits (EOB) statement I receive, so I must call them to get this information.
Let’s compare Mick’s payments with the payments made by another friend of mine at another dermatologist’s practice. Jimmy, who is over the age of 65 and therefore is on Medicare, went to a private, single practitioner whose practice is not “housed” in a building owned by a hospital. Therefore, facility fees are not charged. In addition to Medicare, Jimmy has a Medigap Plan F policy to pay for the deductibles and co-insurance that Medicare does not pay.
The two dermatologists’ offices are 15 miles apart. While Jimmy’s dermatological services are not exactly the same as Mick’s (no new patient charge and a larger number of lesions removed), you can see that the absence of facility fees brings the cost of the services way down into a more affordable range. With a Medigap F policy, Jimmy had no out-of-pocket expenses for the two 2016 visits shown below and the total amount paid was only $263!
What a difference! For essentially the same healthcare services miles apart, one man paid $263 and another paid $1267. The main difference between the two bills is one charged facility fees and the other did not.
Summary of How Facility Fees Drive Up Healthcare Costs
When Medicare (the healthcare program that all private employer-sponsored health plans look to for reimbursement guidance) allows facility fees to be charged by hospital-owned out-patient medical practices, it is “incentivizing” independent doctor-owned practices to change their corporate structure. The fact that facility fees drive up healthcare costs doesn’t seem to matter on the reimbursement side of the affordability equation.
As facility fees line doctors’ and hospitals’ pockets, the consumer is supposed to make up for the higher healthcare costs by paying higher insurance premiums, more out-of-pocket, and getting less health benefits. Let’s show our government’s health policy wonks and bureaucrats what we think of facility fees. Before signing on with a new doctor, ask if facility fees are included in your out-patient bills. If your current doctor charges facility fees, call and voice your displeasure before your next appointment. Ask for facility fees to be waved. If the practice does not comply, then seek medical attention at a practice that does not include facility fees. If you don’t ask about facility fees, don’t tell out-patient policies will cost you (and all Americans) big time.