Patients increasingly charged 'facility fees'

Kaiser Health News/The Washington Post reports that patients are increasingly being charged "facility fees," which are "the result of an obscure change in Medicare rules that occurred nearly a decade ago. Called 'provider-based billing,' it allows hospitals that own physician practices and outpatient clinics that meet certain federal requirements to bill separately for the facility as well as for physician services. Because hospitals that bill Medicare beneficiaries this way must do so for all other patients, facility fees affect patients of all ages. Doctors' offices owned by physicians and freestanding clinics are not permitted to charge them." The fees for an outpatient facility may "range from about $25 to hundreds of dollars per visit."

"One billing consultant has estimated that the fees could generate an additional $30,000 annually per physician for hospitals. Hospital executives say revenue from these fees is necessary to help defray their overhead, pay salaries and meet stringent standards set by the federal government and inspectors, requirements that do not apply to their competitors." But critics "regard the fees as disguised price increases that ratchet up the cost of care at a time consumers can least afford it" (Boodman, 10/6).

The Wall Street Journal reports that while most hospitals "don't compete on price and rarely publish measurements of their quality, if they measure it at all, "the hospitals in Pennsylvania are another story. "For two decades, a state agency has published 'medical outcomes' -- death and complication rates -- from more than 50 types of treatments and surgery at hospitals. The state has found that publishing results can prompt hospitals to improve, and that good medical treatment is often less expensive than bad care. One reason is that high-quality treatment usually results in shorter hospital stays and fewer readmissions."

"The theory underlying the Pennsylvania program is that, to create a truly competitive health-care market, consumers need hard information showing which hospitals perform better. ... The White House is looking at publishing information possibly including medical outcomes as part of overhaul efforts, officials say. Quality data could also be used in existing programs" (Burton, 10/6).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.