You can't avoid facility fees, but you can ask questions, negotiate

One day about 10 years ago, the bill for a visit to a sleep medicine doctor for an update on my sleep apnea treatment arrived as expected.

What wasn’t expected was a charge for about $200 as a “facility fee.”

It was the first time I had seen such a charge, so I called the system’s billing office to find out what that fee was for. I didn’t really get a clear answer, but eventually learned that the sleep center I had been going to had been bought by a local hospital system.

The provider removed the fee … that time.

I have resisted facility fees ever since when dealing with providers that have been acquired by a hospital system.

We were, of course, not the only ones facing this charge. Facility fees are now as common as $15 acetaminophen capsules at a hospital. You’ve likely seen them show up on your bills as well.

But where did they come from, and how should patients deal with them?

How facility fees have expanded

Facility fees have been around for a long time, but until recently they were limited to fees for in-hospital care. They were charged to pay for non-physician personnel and the cost of maintaining the facility, but also for satellite facilities the hospital had purchased. The medical systems maintained that collecting facility fees enabled them to provide medical care in many rural areas as well as to poorer patients, and to offer 24/7 trauma care.

“The way I like to think about facility fees is that it’s a charge for the use of the facility itself and all of the operational costs that come with supporting that infrastructure,” said Andrew Gordon, editor of the Marshall Allen Project newsletter.

Then, as hospitals began buying independent practices, Gordon said, "the result for patients is the same visit, the same doctor, the same procedure but, because it's owned by a larger organization, there are other fees that come with this.”

“I think a lot of people are questioning the value behind facility fees in certain situations because if operationally the only thing that changed was ownership, there is a larger question around justifying the added costs,” he said. “This has fueled a lot of the conversation around site-neutral payment (for Medicare)."

Advocacy organization Better Solutions for Healthcare says facility fees have caused physicians’ office prices to increase on average by 14.1% after acquisition by hospitals.

“Why you’re seeing them more is because hospitals are eating up every other independent practice in town and every independent facility, whether it’s an imaging facility or a lab or whatever,” said Katy Talento, writer of the AllBetter newsletter, naturopathic doctor, and a former advisor to President Trump.

If your family doctor has been bought by a local hospital, you’re probably going to start seeing that additional facility fee “because, even though you’re in the same building, you’re in the same office suite, you’ve stepped onto hospital territory,” Talento said.

Hospital system’s view on facility fees

When asked for comment on the use of facility fees, the American Hospital Association sent a fact sheet that in part says:

Facility fees are the portion of a health care treatment bill that covers all the costs of delivering patient care, except for those that are billed by physicians and other professionals. … Facility fees provide hospitals with the resources necessary to make available the high-acuity services only they can provide on a 24/7 basis, such as emergency and trauma care. This includes around-the-clock nursing and physician services, medical equipment, drug therapies and maintaining critical building and community infrastructure. … Facility fees are increasingly used to cover the true cost of providing physician services, which hospitals do by subsidizing physicians’ pay above the underpayment that they are reimbursed from both public and private payers.

But Talento doesn’t buy the reasoning.

“There’s literally no excuse for (a facility fee) in an independent office building, no excuse whatsoever,” she said.

How to deal with facility fees

But facility fees are here for now, so how can you deal with them, especially as a cash-pay patient?

“The best self-protection is to avoid like the plague hospital-owned practices when you go for care­,” Talento said. “The way you want to do this is when you go to their website, make sure there’s no hospital logo. If you’re not sure, call the practice and say, ‘Hey, are you guys, part of’ whatever your big local provider is. ‘Are you part of any hospital system or are you independently owned?’ The keyword is ‘independent.’”

Gordon, whose newsletter focuses on encouraging patients to “never pay the first bill,” offered suggestions before scheduling care.

• Ask directly whether facility fees are tied to the visit or procedure you're scheduling.
• Ask whoever is ordering or referring you, “Does this have to be done in a setting that typically comes with a facility fee?”
• Ask what the lowest site of care is that would still allow you to get the service you need.

“It's possible that the staff at these practices will know whether or not facility fees are regularly included on their bills, even if they aren't part of the billing office, so it's always worth making the inquiry to see,” he said.

What if you’ve already received a bill with a facility fee?

‘Patients can push back and try to negotiate these facility fees,” Gordon said. “They can explain that if they had gone somewhere else, those fees would have been nonexistent. They may not completely get the fee removed from their bill, but they certainly could use that as a lever for a substantial discount.”

Talento also warned patients against automatically accepting in-system specialist referrals and encouraged them to go to an independent specialist, imaging center, or surgery center.

“Primary care that’s owned by a hospital just becomes a high-priced referral factory,” she said.

Samaritan members needing surgery can also get guidance from the ministry’s Provider Relations Department by contacting our Care Compass team at [email protected] or calling 877-764-2426, Ext. 7082. Those staffers will help members get set up with ambulatory surgery centers that are independently owned and don’t charge facility fees.