Can the US healthcare system learn something about how to operate from car dealerships? Lawrence Kosinski, MD, MBA, a governing board member of American Gastroenterological Association (AGA), believes so.
There's growing concern in the United States about the lack of clarity surrounding facility fees, which are intended to cover costs of maintaining medical facilities. Kosinski thinks that Congress should look into the transparency mandate it created for car prices as a model for how to address this.
A 1958 federal law set the stage for the consumer-friendly breakdown of costs and relevant performance data that anyone who has bought a new vehicle in the United States would recognize.
"You look at that and you know exactly what you are paying for," Kosinski told Medscape Medical News. "In healthcare, we need something like that."
Novel solutions like Kosinski's will be increasingly necessary, as lawmakers on the state and federal level have begun to set their sights on tackling this issue.
The Biden administration in July expressed concern about an increased use of facility fees for healthcare provided at doctors' offices, saying these additional costs often surprise consumers. House Energy and Commerce Chairwoman Cathy McMorris Rodgers (R-WA) also raised this issue several times this year, including at a May meeting about pending legislation on price transparency for health services, where she mentioned the case of a man who underwent eye surgery in Maine.
"His bill included three separate facility fees totaling $7800 and professional fees totaling $6200," Rodgers said. "Why are three facility fees necessary for 1 hour of surgery in one O.R.?"
AGA's Kosinski said facility fees cover the additional costs hospitals and clinics face in providing even routine treatments for some patients. For example, colonoscopy for a patient with a body mass index of 50 would pose special challenges for the anesthesiologist.
These factors need to be considered in setting policies on facility fees, he said. But there is no reason hospitals and other sites of medical care can't make the information about facility fees easy for patients to find and understand, Kosinski said.
"I'm struggling to see a reason why we can't be more transparent," he said.
Big Battles Ahead
There are two connected battles ahead regarding facility fees: Efforts to restrict these additional charges for many medical services and fights over the need for greater transparency in general about health costs.
Senate Health, Education, Labor and Pensions Chairman Bernie Sanders (I-VT) is seeking to broadly restrict facility fees through his pending Primary Care and Health Workforce Act (S. 2840). The measure would block hospitals from charging health plans facility fees for many evaluation, management, and telehealth services.
The American Hospital Association (AHA) opposes it. They argue that the current payment approach rightly accounts for the added costs incurred when hospitals treat patients who are more likely to be ill or have chronic conditions than those seen in independent practices.
AHA said hospitals also need to maintain standby capacity for natural and man-made disasters, public health emergencies, and unexpected traumatic events. In September, AHA launched a television ad campaign to oppose any drive toward site-neutral policies. AHA says reducing the extra payments could cause more hospitals to shut their doors.
But there's persistent interest in site-neutral payment, the term describing when the same reimbursement is given for care regardless of setting. This would lower pay for hospitals.
Among those pressing for change is an umbrella group of medical organizations known as the Alliance for Site Neutral Payment Reform. Its members include the American Academy of Family Physicians, American Academy of Orthopaedic Surgeons, American College of Physicians, Community Oncology Alliance, and Digestive Health Physicians Association.
And on November 9, Sen. Maggie Hassan (D-NH) argued for eventually including a site-neutral Medicare provision to a major healthcare package that the Senate Finance Committee is putting together.
Hassan is seeking to end what she called the "the practice of charging patients unfair hospital facility fees for care provided in the off-campus outpatient setting, like at a regular doctor's office."
Senate Finance Chairman Ron Wyden (D-OR) and the ranking Republican on the committee, Sen. Mike Crapo (R-ID), told Hassan they intended to work with her to see if this issue could be addressed in the pending legislative package.
A 2015 budget deal marked the last time Congress took a major step to address the higher cost of services provided in hospital-owned facilities.
Lawmakers then were scrambling to find cuts to offset spending in what became the 2015 Bipartisan Budget Act. This law established site-neutral payments under Medicare for services received at off-campus outpatient departments but exempted hospitals that already ran these kinds of operations or had advanced plans to create them.
Lawmakers are well aware of the potential savings from site-neutral policies and could look in time again to use them as part of a future budget deal.
In fact, in June, Hassan and Sens. Mike Braun (R-IN) and John Kennedy (R-LA) introduced a bill meant to basically end the exemption given in the 2015 deal to existing hospital outpatient departments, which has allowed higher Medicare payments. In a press release, Braun estimated that their proposed site-neutral change could save taxpayers $40 billion over a decade.
As Debate Continues, States Are Moving Ahead With Changes
Consumer activists have won a few battles this year at the state level about facility fees.
In July, Maine Gov. Janet Mills, a Democrat, signed a law that requires medical organizations to report facility fees to the state, which will share them publicly. Facility fees can pop up after a patient has received an insurance company estimate of the out-of-pocket costs for care.
"Patients receive bills bloated by healthcare providers that overcharge for services and insurance companies that deny claims without explanation," the Portland Press Herald reported in a 2022 story. "And with little clout to fight back or even negotiate, feeling helpless, they often give up and pay, worn down by a system that is as time-consuming as it is obtuse."
In May, Colorado enacted a law that will require patient notification about facility fees at many hospitals in the state.
In June, Connecticut expanded its law regarding facility fees and prohibited them for certain routine outpatient healthcare services. A statement from Gov. Ned Lamont's office said the original intent of these facility fees was to ensure hospitals could maintain the around-the-clock care needed for inpatient and emergency care.
"However, these fees have been increasingly applied to services such as diagnostic testing and other routine services," the statement said.
But there have been setbacks as well for those seeking to curb facilities.
The Texas Hospital Association (THA) in May said its advocacy defeated a pair of state bills, House bill 1692 and Senate bill 1275, that sought to limit facility fees for outpatient services.
In rallying opposition to these bills, THA said the loss of facility fees would threaten care for patients. Facility fees help cover costs "beyond the doctor's bill," such as "lab technicians, interpreters, medical records, security personnel, janitorial staff, and others," THA said.
More Patients Shopping?
It's unclear when — or if — Congress and other states will take major steps to reduce additional payments to hospitals for outpatient care.
But the increased use of high deductibles in health plans is driving more consumers to try to understand all of the costs of medical procedures ahead of time and, thus, drawing attention to facility fees, said Charlie Byrge, the chief operating officer of MDsave.
The average annual deductible levels for an individual increased by 3.0% to $2004 from 2020 to 2021 and for a family plan by 3.9% to $3868, according to a federal report. Some people have higher deductibles, exceeding $5000, Byrge said.
"That's creating an opportunity for firms that can connect physicians directly with patients who will pay part or all of the costs of a treatment out of pocket," Byrge told Medscape Medical News.
Doctors and hospitals work with MDsave to charge preset prices for certain services, such as colonoscopies and mammograms. Consumers then can shop online to see if they can save. For example, in Nashville, Tennessee, where MDsave is based, the cost of a colonoscopy through MDsave is $2334, about half of the $4714 national average, according to the firm's website.
This model for pricing routine medical care is akin to those used for other products and services, where companies decide ahead of time what to charge, he said.
"You don't buy an airline ticket from Southwest or United or Delta and then there's a bill after the fact because the price of gas went up a little bit on your flight," Byrge said.
This will drive more competition among hospitals and clinics, in places where there are several sites of care in a region, Byrge said. But there are advantages for physicians and hospitals from the MDsave approach, he said.
"They know they're getting paid upfront. They're not going through the delays and headaches of the insurance reimbursement process. There are no denials. It's just an upfront payment, and I think that's what we're starting to see the market really moving toward," he said.
Kerry Dooley Young is a freelance journalist based in Washington, D.C. Follow her on Mastodon and Threads as @kerrydooleyyoung.
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