Understanding Hospital Facility Charges and Their Impact

Hospital facility charges can be a mystery to many of us. These charges are separate from the cost of medical care and can vary widely depending on the hospital.

Some hospitals charge significantly more for facility fees than others. For example, a study found that the average facility fee for a hospital stay in the US was around $1,200.

Facility fees can be a shock to patients, especially those who are already dealing with medical bills. In fact, a survey found that 60% of patients reported being surprised by facility fees.

Facility fees are often billed separately from doctor fees, which can make them harder to track.

Emergency department evaluation and management cost growth is primarily driven by rising facility fees, which have increased 531% from 2004 to 2021.

Professional fees for emergency department visits have grown significantly, increasing 132% from $138 in 2004 to $321 in 2021.

However, facility fees have outpaced professional fees, with an average cost of $713 in 2021, more than twice as expensive as the average professional evaluation and management claim.

The rapid growth of facility fees in emergency departments is a significant contributor to the rising cost of healthcare, and it's essential to understand the factors driving this trend.

Emergency department facility fees have grown at a faster rate than both physician office and urgent care evaluation and management fees, which is a notable difference.

In fact, while professional fees for emergency department visits have grown 132% since 2004, facility fees have increased 531% during the same time period.

Insurance companies may not cover facility fees, and some may only pay a portion of it. You can check with your insurer to find out what their policy is on facility fees.

Some insurers will pay more for hospital-owned clinics compared to private physician practices. For example, Medicare pays twice as much for office visits at hospital-owned clinics as compared to private physician practices.

You can negotiate with the healthcare provider to waive or lower the facility fee. You can also appeal to your insurer to cover more of the cost.

Professional fees in the emergency department are assigned a complexity level based on guidelines from the AMA, which now only takes into account medical decision making.

Professional fees are billed at five complexity levels using CPT codes 99281-99285, depending on visit complexity. The level of complexity is determined by the physician's history, physical exam, and medical decision making.

From 2004 to 2021, the share of level 5 professional fee claims increased from 10% to 34% of all claims. Meanwhile, moderate level 3 claims went from nearly half (48%) to a quarter (25%) of all claims.

Level 5 professional fees doubled from $218, on average, in 2004 to $454, on average, in 2021. Level 1 professional fees had the most modest growth, increasing 55% from $49, on average, to $76, on average.

You might be billed for the same procedure and the same medical billing code twice on the same day.

Hospitals can charge facility fees for outpatient services at affiliated clinics, even if they're not near a hospital, as long as they're affiliated with a hospital.

Be aware that clinics affiliated with hospitals may look just like private practices, but they can charge that extra fee.

Federal law allows this, so it's not just a matter of the hospital trying to make more money.

You should always look carefully at your bills to understand exactly what you're being charged, and exactly what you're paying for.

You've been charged a fee, and you're not sure what it's for or why you're being charged it. Facility fees are a common culprit, and they can be confusing.

Some insurers won't cover facility fees, or they'll only cover part of the cost. It pays to ask up front about facility fees, including the amount and whether it's covered by your insurance.

You might be billed for the same procedure and medical billing code twice on the same day, with one being marked as a facility fee and the other not. Keep an eye on your bills and understand exactly what you're being charged for.

Facility fees vary widely, and it's not uncommon for them to be in the hundreds or even thousands of dollars. You might be able to negotiate or appeal the fee, but it's essential to check your insurance policy first.

Hospitals can charge facility fees for outpatient services at affiliated clinics, even if they're not near a hospital. This can be a surprise if you're not expecting it, and it's essential to ask about facility fees when you make an appointment.

Professional fees, on the other hand, are assigned a complexity level based on guidelines from the AMA. However, facility fees are coded as level 1-5 based on the resources required to care for the patient, but there's no nationally accepted standard for assigning levels.

The cost of facility fees at each level has increased faster than professional fees at any level, and higher complexity level facility fees have grown the fastest. Level 5 facility fees increased over 9 times the rate of growth for professional fees during this time.

Nancy DuBois, a woman from New Orleans, was charged a facility fee of $1,434.01 for a diagnosis of "frozen shoulder" at Tulane Institute of Sports Medicine.

She was responsible for paying $137 out of this fee. The clinic, Tulane Institute of Sports Medicine, is part of Tulane Medical Center.

One person had a colonoscopy with a total charge of $2,312, but paid only $844 after their carrier negotiated a reduced rate.

In facility fee costs, there's a significant variation even within levels of complexity.

The average cost of facility fees increases with each level, but there's a wide range in claim costs within each level.

For example, in 2021, level 5 facility fees were, on average, $102 more expensive than level 4 facility fees.

The top quarter of level 5 fees was more than twice as expensive as the bottom quarter, with a cost of $1,352 compared to $576.

There's substantial overlap between the costs of facility fees at all levels, making it difficult to predict costs based on level alone.

Nancy DuBois, a woman from New Orleans, had to pay a $137 co-pay and a doctor bill after being diagnosed with "frozen shoulder" at a sports medicine clinic.

She also received a bill for a $1,434.01 facility fee, which she was responsible for paying.

One person had a colonoscopy with a total charge of $2,312, but was able to reduce the amount to $844 through a contract with their insurer.

The individual paid $844 for the colonoscopy, which included charges for MD, facility, and lab work.

In my case, I paid a $30 co-pay four times for a colonoscopy, once for each of the doctor, anesthesia, pathology, and prep briefing visits.

My girlfriend's colonoscopy took place at a GI center, where the biggest line item on the bill was a $2,700 facility fee.

According to a study, hospital facility charges can vary significantly depending on the state, with a 10-fold difference between the highest and lowest charges.

Many healthcare experts agree that the current system of hospital facility charges is complex and opaque, making it difficult for patients to understand what they're being charged for.

A recent report found that the average hospital facility charge for a hospital stay in the US is around $15,000.

Providers defend facility fees by explaining that services provided in a hospital outpatient department are billed separately, with one bill for the physician's services and another for non-physician charges.

These non-physician charges reflect costs for equipment, utilities, maintenance, supplies, and non-physician staff, such as nurses and other staff.

A hospital may argue that the physician bills a reduced service fee because the hospital is responsible for the "practice expense" associated with the visit, including non-physician support staff.

According to an insider at a New Orleans medical institution, the relationship between the doctor's fee and the facility fee can be seen in a chart that shows how these fees relate to each other for common office visits.

However, this chart is several years old and may not reflect current fees, as an example from the same institution showed facility fees upward of $1,000.

Non-physician doctors may not always be aware of facility fees, so it's essential to ask them about it when making an appointment. Many doctors practice at multiple locations, and some may not charge a facility fee at all.

You can ask your doctor if they have any influence over facility fees, but it's unlikely they can waive or lower the fee. However, they can provide you with information on what to expect and how to navigate the process.

Some doctors may be more willing to help you understand and dispute facility fees than others. But ultimately, it's up to you to advocate for yourself and ensure you're not surprised by unexpected charges.