And now a bill had arrived, for $264.19, more than five times the copay I’d thought was the limit for in-network care.
The culprit was something called a “facility fee.” The receptionist had mentioned that I would be receiving two bills for the visit, one for the visit and one for a facility fee, but I assumed they would total to my $50 copay. Now here I was with a surprise charge of more than $200. I could pay it, but many Americans could not. About 40 percent of us don’t have $400 readily on hand for emergencies, according to the Federal Reserve.
When I investigated, I learned that Brigham Dermatology Associates was allowed to charge me a facility fee because it is not a freestanding outpatient clinic owned solely by physicians but part of Brigham and Women’s Hospital and Mass General Brigham. I was essentially charged for being inside a hospital facility, even though the clinic is down the street from the hospital.
What gave me some consolation (though it mostly horrified me) was learning that the mistake I made is common. There have been many instances in which patients have received surprise facility fee bills. I read of one patient who had been charged a facility fee for an at-home video visit.
Facility fees, which hospitals are allowed to charge to cover the costs of remaining open around the clock, obviously increase the price of health care. In fact, facility charges appear to be the largest driver of the substantial increase in hospital prices in recent years. And now they are contributing to rising prices for outpatient care, because hospital systems are opening outpatient clinics or acquiring freestanding ones and then adding on the facility fees. The share of hospital-owned outpatient practices more than doubled from 2002 to 2008 and doubled again from 2012 to 2016. It is growing more and more difficult to see a provider without getting charged a facility fee.
The federal government is pushing back by implementing a site-neutral payment policy for Medicare. Medicare will pay for outpatient care provided at hospital clinics at the same rate as outpatient care provided at a freestanding clinic. But hospitals are fervently against site-neutral payments, arguing that facility fees help support patient careand this has deterred private insurers from following Medicare’s lead, even though site-neutral payments would lower patients’ health care costs.
Unfortunately, even if more insurers did impose a site-neutral payment policy, that would address only part of a wider issue. Facility fees are just one of many reasons that the integration of hospitals and clinics leads to higher costs. It decreases competition and increases the chance a hospital will refer a patient to its own clinic. In some markets where one hospital system dominates, patients have no choice but to go to that hospital or to clinics owned by that hospital.
I had previously believed that there were benefits to combining hospitals and physician practices. Theoretically, hospitals and physicians could coordinate care more easily, and all patient information would be in a single medical record system. Unfortunately, the evidence refutes this. Integrations do not lead to higher quality care, and they have little effect on health outcomes.
Federal antitrust agencies have yet to substantially challenge hospital-physician integrations. And despite efforts to protect patients from surprise bills, the No Surprises Act, which went into effect this year, does not protect patients against facility fees — although facility fee bills can be a surprise even to someone like me, who has worked within the system. In calls with Mass General Brigham and my insurance company, I was fortunately able to make the argument that my visit should be considered an outpatient office visit, and my facility fee charge was removed. However, this was a time-consuming process. Patients should not have to bear the burden of disputing facility fee charges or need an understanding of the intricacies of insurance billing.
Don’t be surprised if this happens to you. COVID-19 has put a financial strain on independent provider practices, making physician practices more vulnerable to hospital acquisitions. Until antitrust enforcement becomes stronger, we will be seeing more health system monopolies in the coming years.
Danielle Zhou is a candidate for a master’s degree in health policy at the Harvard TH Chan School of Public Health.