A legally mandated report on hospital systems’ facility fees released Tuesday examines whether the state should limit fees that opponents call expensive and opaque and that hospitals say are essential for off-site operations. It seems likely that this will spark new debate.
of Hospital facility usage fee report Fees added to services in non-acute care settings drive up healthcare costs by more than $50 million annually, are opaque and confusing, and are an incentive for independent physicians to partner with large hospital systems. I concluded. But the report also notes that a decline in fee revenue could significantly reduce federal matching funds that have been used to expand Medicaid eligibility, which the task force concluded some of the times. It has been repeatedly pointed out that sufficient data has not been collected for this purpose.
Immediately after the bill was announced, more than half a dozen patient advocacy groups called on lawmakers to take further steps to cap fees and increase transparency in health care costs. However, hospital industry representatives on the steering committee that issued the report warned lawmakers not to act on the findings, saying the committee did not adequately assess key issues related to these fees. In the letter of opposition, it was stated that
What comes next?
However, while the 2024 Congress saw much more subdued debate over health care than in past years, a new report resulting from the 2023 compromise bill will bring health care back to the forefront in 2025. There is a possibility that it will be pushed up.
“This report confirms what too many Coloradans are already experiencing: paying astronomically high medical costs and confusing cover-ups while the quality of care remains the same.” “That means they’ll be charged a higher rate,” said Austin Blumenfeld, executive director of the workforce advocacy group Centennial State Prosperity. – Class Coloradan. “Our elected officials need common sense regulations to stop hospital chains from lining their pockets at our expense and to help residents know what to expect when receiving care. It’s time to protect Coloradans by enacting this.”
Colorado Congressmen Emily Sirota and Andy Boesenecker answer questions during a 2023 House committee hearing on the facility fee restriction bill.
But hospital officials say the report oversimplifies the complex issues at the heart of health care financing today, and lacks data and employer perspectives on the need for these costs. He warned that it seemed to be based on a preconceived notion.
In a statement, the Colorado Hospital Association said, “This report is often not objective and provides comprehensive coverage of important issues such as the impact of facility fees on access to care, quality, and health equity. Time and again it falls short in providing analysis.” “While CHA acknowledges the (Colorado Office of Health Policy and Finance’s) efforts to moderate conflicting views on the steering committee, the conclusions drawn from this report should be viewed with skepticism. , and should not be relied upon to inform important health policy.”
Part of the hospital landscape where prices are also evolving
Facility fees are charges, separate from physician fees, that are added to the bill of patients who receive primary care or specialty care services outside the hospital from clinics owned by the hospital system. These costs, which are required under federal law to be billed separately from other costs, are the product of two changes over the past 25 years. These include efforts by hospital systems to move care outside of the acute care setting to locations such as offices and clinics, and increased system ownership. within those non-acute care settings.
Hospitals argue that the fees are necessary to fund non-acute care infrastructure, from buildings to information technology to the security guards and custodians who staff clinics and offices. But more patients are starting to express concerns about surprise charges on their bills and the impact on their ability to pay for their care, an issue that was addressed in the 2023 bill that originally sought to ban facility fees. The peak has been reached.
House Bill 23-1215 came after hospital leaders warned that such a ban could force many clinics to close without funding to sustain operations. has been amended to prohibit fees charged to patients in one example: preventive care. But the bill also funds research examining the impact of fees on patients, quality of care and access to care, which was presented Tuesday to the House and Senate Health and Human Services committees.
hospital hall
Key findings from the committee
The seven-member appointed steering committee notes that consumers will pay approximately $13.4 billion in facility fees between 2017 and 2022, with direct revenue growth averaging approximately 10% per year. discovered. The state’s 10 largest hospital systems account for 80% of the charges, and the most commonly assessed charges are for laboratory work, X-rays, physical therapy, mammograms, etc. that are typically performed at independent facilities owned by the hospital system. It was about service.
The commission determined that hospital outpatient department fees increase annual health care costs by $50.8 million to $53.7 million compared to reimbursement to affiliated and independent physicians who do not charge fees. It concluded that commercial payers, such as those covered by employer-based insurance, were charging 90% higher reimbursement fees for hospital-owned facilities than for independent facilities.
The report acknowledged that the impact of these fees on access to care is “not easily quantifiable,” but noted that vertical integration of hospital systems and physician services through acquisitions could make health care more expensive. It cited other studies making the claim. This can have a negative impact on patients’ willingness to pay for drugs and services, and with nearly 80% of physicians currently employed by hospitals, health systems, or corporations, patients are more likely to seek lower-cost alternatives. It concluded that seeking medical care could be difficult.
Do I need to study more?
Additionally, as payer reimbursement for independent physicians, including Medicare, has stagnated, the ability to join a hospital system and receive facility fees to offset operating costs has become an incentive to move away from being an independent physician. The report said that Meanwhile, the fees add further confusion to an already complex medical billing system.
The committee made no recommendations, but noted that further analysis is needed to understand the financial impact of fees and the impact of practice acquisition and integration on quality and access to care. We also found that employers, the largest purchasers of health care services, are not very involved in this issue and that efforts are needed to increase employer involvement.
Doctors use digital tablets as part of patient care.
However, the Commission acknowledged that some critical data requested for analysis was not available due to its unique nature, billing structures, and variations in providers’ business designs. The report also found that the reduction in hospital revenue due to facility fee limits would reduce fee revenues to hospital providers, which fund Medicaid eligibility expansion, by $100 million per year, when the reduction in federal matching funds is factored into the formula. It pointed out that the decline could be between $10 million and $1.1 billion.
Opposition to regulations needed for hospitals
Watchdog groups slammed the report, saying it presents evidence of claims that fees create cost barriers to health care access and encourage industry consolidation that further undermines affordability and availability. . Groups from the Colorado Law and Policy Center to the Leukemia and Lymphoma Society are not calling for a complete ban on facility fees, but they do want legislators to tighten regulations on when and how providers can impose such fees. asked to do so.
“When facility costs are concentrated among hospital systems with the most market power, patient quality does not improve and consolidation trends worsen,” Priya Teran, communications manager for the Colorado Consumer Health Initiative, said in a news release. Only,” he said. “This report makes clear that legislative action is needed to regulate hidden fees in hospitals and help consumers.”
However, in a letter of objection attached to the report, UCHealth Chief Financial Officer Dan Lieber, who was a member of the seven-member steering committee, said, “This report does not provide thorough and accurate information. “It is simply not a reliable and comprehensive analysis of facility charges.” Or a balanced photo. ” Most of the committee’s time was spent collecting data rather than analyzing it, leaving too much critical data unavailable and the report questioning how prices impact access to care and quality of care. He wrote that it draws conclusions that are not well-supported.
“Based on these factors, I believe additional analysis is essential before Congress considers any action,” he wrote.
