Hospitals Bill More Than $1 Billion In Facility Fees Over Two Years
Connecticut consumers were billed for more than $1 billion in facility fees for outpatient services in 2015 and 2016, documents filed with the state Office of Health Care Access (OHCA) show.
Twenty-two of Connecticut’s 30 hospitals charged these fees, bringing in $600.7 million in 2015 and another $488.8 million in 2016, according to an analysis by Conn. Health I-Team.
The state’s two largest hospital systems, Yale New Haven Health and Hartford HealthCare, accounted for almost half of the total facility fee revenue in 2016. Yale and its four hospitals billed $144.3 million; Hartford and its five hospitals, $80.9 million. Stamford Hospital charged $118.2 million, the most of a single hospital.
Patients have long complained about facility fees, which hospitals charge for outpatient services at facilities they own to cover operational expenses. Of the 1.4 million outpatient visits in 2016 facility fees were charged for everything from five-minute office visits to diagnostic tests such as MRIs and mammograms.
Connecticut, which had earned an F from health advocates for its lack of transparency in medical costs, passed a law in 2015 requiring hospitals to notify patients if they will be charged a facility fee. Hospitals must clearly identify facility fees in bills, notify patients if they acquire a physicians’ group and file an annual report with OCHA on how much they earn in fees.
Patient advocates say that the law has made consumers more aware of the fees, but it is often confusing for patients who get a second bill for hundreds or sometimes thousands of dollars for care.
The fees are paid by consumers, their private insurance, Medicaid or Medicare.
“It’s a trap for the unwary,” said Ted Doolittle, head of the state Office of Healthcare Advocate. “It’s still something that is happening.”
Doolittle says his staff is currently working a few cases where patients were charged large facility fees, including a woman who received outpatient surgical care and expected to pay a $50 co-pay and was hit with a $930 facility fee.
West Hartford resident Leslie Silverman, who is an employee of Connecticut Public, said she took her 15-year-old daughter to their doctor’s office to get blood drawn for a tendon in her ankle that wouldn’t heal in 2014. The doctor’s office had difficulty drawing blood and sent her to the West Hartford Surgical Center, which is owned by Hartford Hospital.
“We had no idea we were going to get walloped with a $1,200 facility fee, it cost four times as much as we thought,” said Silverman, who added that because it was part of an experimental procedure not covered by insurance, they paid the fee out-of-pocket.
“Our doctor wasn’t trying to mislead us; it just wasn’t on anybody’s radar,” she said. “We went there because our doctor said we have to do this and then we see the bill and we go, ‘Whoa.’”
Hospitals say facility fees are necessary to upgrade infrastructure costs. “Generally, when a facility becomes part of a hospital, the technology, including software and hardware, must be of a certain standard,” said Michele Sharp of the Connecticut Hospital Association. “Additionally, these facilities must have emergency stand-by capacity and meet more stringent regulatory requirements. As a result, the infrastructure costs associated with hospital-owned facilities are greater than the costs of a standalone office.”
Patient advocates say the public filings are a step in the right direction, but there’s a long way to go.
“As a consumer representative, it’s flabbergasting,” said Lisa Freeman, executive director of Connecticut Center for Patient Safety. “We’re paying more and more and we can’t figure out how much it will be ahead of time.”
What The Filings Reveal
In 2016, Connecticut hospitals charged facility fees at 184 off-campus facilities, the reports show. Some of the most frequent types of care that patients were charged facility fees for include radiation treatment, echocardiograms, sleep disorder testing, colonoscopies and mammograms.
Ellen Andrews, executive director of the Connecticut Health Policy Project, says the fact that mammograms are among the most frequent service for which facility fees are charged is “stunningly stupid.”
“A mammogram is preventive care,” she said. “Every time you institute another hassle and you make it harder to go to the same place you’ve always gone, you are going to get some people who just don’t go through the trouble. So, if it’s a problem for people getting preventive care, that’s really penny wise and pound foolish.”
The fees that caused the most outrage a few years ago were facility fees charged at doctor’s offices owned by hospitals. According to a 2014 report by Attorney General George Jepsen, facility fees became more common as hospitals acquired physicians’ practices. Patients complained about showing up to the same doctor they’ve seen for years, expecting to pay the same co-pay as always, but were later hit with a big facility fee.
Some of those fees are now banned in Connecticut, however.
Effective Jan. 1, 2017, hospitals cannot charge existing patients facility fees for a routine doctor’s visit that is billed as Evaluation and Management, which was part of the 2015 health bill spearheaded by state Senate President Pro Tem Martin Looney, D-New Haven, and Senate Republican President Pro Tem Len Fasano, R-North Haven.
Some hospitals will feel the impact of this change. In 2016, Yale New Haven earned $9.9 million for five-minute outpatient visits—its highest facility fee charged—which is now banned.
Congress also tightened regulations on facility fees in its 2015 budget by limiting what hospitals can charge at facilities acquired after Jan. 1, 2017.
There are signs that hospitals got the message, too. A spokesman for Hartford HealthCare said that as they’ve grown they’ve tried to employ physicians at outpatient facilities through the Hartford HealthCare Medical Group rather than through one of their hospitals so their patients won’t be hit with extra fees.
“This helps us limit facility fees for patients,” said Hartford HealthCare spokesman Shawn Mawhiney. “We do our best to limit the financial impact on our patients. In order to provide the latest technology and the best care possible, we need to have a sustainable business model. In some cases, that means charging facility fees.”
Hospitals That Don’t Charge
Eight hospitals did not charge facility fees for outpatient services in 2015 or 2016, either because they did not have outpatient facilities or because they chose not to. They include, Bristol Hospital, Day Kimball Healthcare, Gaylord Hospital, Griffin Hospital, Hebrew Hospital, Natchaug Hospital, Sharon Hospital and Silver Hill Hospital.
Bristol Hospital did not charge fees in 2015 or 2016 but started charging them last year for certain services provided by its Bristol Multi-Specialty Group because they needed the money.
“We made a conscious decision going back years based on patient dissatisfaction and just our philosophy that we were going to not have patients get these fees,” said Bristol Hospital President and CEO Kurt Barwis. “When we made that decision, we were solely reacting to our community.”
“I’m not sure that it was the right choice,” Barwis added.
The decision to charge facility fees was made last summer after, Barwis said, an increase in the hospital tax caused them to end the 2016-17 fiscal year with a $3 million loss. The hospital’s tax bill increased significantly over the last few years according to state estimates. In fiscal year 2012, Bristol Hospital paid $2.94 million for the hospital tax, which increased to $7.6 million in fiscal year 2016.
Barwis said, “The initial reaction was very strong, we had quite a few patients say, ‘All of a sudden, I have to pay this additional fee?’ and obviously some of it is covered and some of it’s not covered based on the insurance carrier that they have.”
“If they are on a high deductible plan, it’s pretty significant for them,” he said.
The interactive graphic designed by Charles Smart.
This story was reported under a partnership with the Connecticut Health I-Team (c-hit.org).