The Ongoing Fight Against Healthcare Sticker Shock

Most of us have, at one point or another, experienced “sticker shock” when we opened a medical bill – no matter how knowledgeable we might consider ourselves, as it pertains to the healthcare industry. And for those who don’t work in healthcare, it can be even harder to feel confident that you’ll be charged what you’re expecting. President Biden recently announced a series of newly proposed rules and initiatives by his Administration that aim to tackle increasing costs and unexpected fees in the healthcare industry, with the stated goal of preventing Americans from being, quote, “ripped off,” and left unable to achieve the American Dream.

The Administration highlighted three new healthcare actions in particular: scaling back the previous expansion of short-term health insurance plans, protecting consumers from medical credit cards and loans, and further preventing surprise medical bills. Let’s take a closer look at this last category.

While frequent Monitor Mondays listeners have certainly heard the “Legislative Update” feature the No Surprises Act (NSA) a time or two, the Biden Administration clarified that it is now focusing on some “loopholes” that have cropped up under the NSA, leaving Americans again vulnerable to unexpected charges. One of the lesser-known types of surprise bills consumers have seen more of in the last few years are facility fees. 

Facility fees were originally charged by hospitals, meant to offset the extra costs of maintaining, as you might guess, the actual facility. But now people are starting to see them tacked on to bills from their regular doctor, urgent care clinic, or outpatient medical or surgery centers – and sometimes even their telehealth bills, due to the fact that more and more physicians are now employed by hospitals or health systems. These fees have grown quickly in recent years, with studies showing an average increase of 531 percent from 2004 to 2021. Insurers are hesitant to cover these fees, often leaving the patient exposed to the charge in part or in whole.

Proponents of the fees state that they allow hospitals to spread out the costs of maintaining expensive facilities and units (like ERs), keep those facilities well-equipped and staffed 24/7, and help cover the losses of patients who are unable to pay their bills (in short, they say limiting these fees could negatively impact patient care). Opponents, which certainly includes patients who have received an unexpected facility fee, have expressed the belief that these fees are simply padding hospital budgets – they have told of their horror not only at the fee amount but that they were often unaware a facility fee would be charged at all.

President Biden made sure to note that the main target of his initiative is addressing that “surprise” aspect of these charges, rather than eliminating them altogether. But some states have taken a stronger approach. Connecticut, Colorado, and Texas all proposed legislation this year to limit facility fees for certain services, while five other states across the country have either already passed or are considering such legislation. The National Academy for State Health Policy has released model legislation for states to consider that prohibits facility fees for services rendered at locations more than a certain distance from a hospital campus, andrequiring annual reporting of fees charged.

While the future of facility fees is unclear, it’s certainly an issue that is worth a closer look. Recent estimates indicate that almost half of patients in the healthcare industry have received a bill with a facility fee – far more even than those hit by traditional surprise bills. So as both D.C. and states begin to investigate the issue, we can likely expect it to move further into the spotlight in the coming months.