Health Care/Joan Retsinas

A Variation on the Healthcare Game of ‘Gotcha’:
The Facility Fee

Enter a hospital, a physician’s office, a pharmacy, a rehab center - and presto, you have entered the game of “Gotcha.”

In “Gotcha” an insurer throws a surprise fee at you. Naively you expected that card you carry to gain you entree to the marvelous world of American healthcare, but with “gotcha,” you must negotiate those surprise hurdles and detours.

“Gotcha” takes many forms.

By now we are familiar with the need for “prior authorization” before seeing a specialist. Without that, the insurer can say “no.” Even if you recognize that a strange-looking lesion warrants a dermatologist, you must first get an OK from a primary care physician.

We also expect “limited formularies” where the insurer will cover a certain number of medications for a specific diagnosis, but no other medications — unless maybe the patient’s physician can provide an overriding need to go outside the formulary. Formularies change; the savvy patient must stay on top of changes.

Then, there are the networks of preferred providers: go outside that network, and the insurer can say “no.” Preferred providers can be in the same practice as non-preferred providers. Again, the patient must be savvy enough to query any provider who looks at an x-ray, who examines a broken limb, who orders an MRI. And provider fees can exceed the terms set by insurers: the patient must content with “balance billing,” to make up the difference. “Gotcha” will trap the unwary patient, sending him sometimes to bankruptcy.

The Biden Administration has taken aim at some of these “gotcha” surprises. Specifically, starting Jan. 1, 2022, a patient generally won’t be responsible for balance bills or out-of-network cost-sharing when getting emergency care, non-emergency care from out-of-network providers at certain in-network facilities, or air ambulance services from out-of-network providers. Note the caveats: still room for “gotcha” bills. The legislation will protect partially from “gotcha,” but only partially. The savvy patient still must read the fine print.

The “prior authorization” gotchas” have drawn fire from both the federal and state governments. This past February the Biden Administration sought to rein in the need for “prior authorizations” in Medicare Advantage plans — a key reason for “dis-enrollments” from Medicare Advantage to Original Medicare. In one AMA survey one-third of providers argued that the delays for prior authorization had harmed patients. Yet insurers have generally held firm: the prior authorizations reduce needless visits.

States too have tried to protect patients from the prior authorization “gotcha”: a flurry of states have introduced “gold cards” that let physicians bypass the need for prior authorizations, exemptions for chronic conditions, and reductions in time allowed for the “PA” from as long as 15 days to a day.

Now, onto the newest “gotcha”: the facility fee.

The free-standing physician office has receded into the Norman Rockwell past. Today three-quarter of physician practices are owned by a corporate entity. The pandemic spurred the purchases. As of the end of 2021, 53% of physicians were employed by hospitals.

Consider the typical outpatient visit to a physician office. Before the hospital owned the practice, a patient would get a bill that encompassed the physician’s services, with the overhead — staff and equipment and site — incorporated into the bill. And insurers would generally cover a reasonable bill, provided of course that the physician was in network and the patient had prior authorization. The patient would have evaded the “gotchas.”

But the hospital purchase introduced a new “gotcha”: a facility fee. Even though the patient will not have stepped into the hospital, the hospital, as owner of the physician practice, can levy a “facility fee.” A physician who advises via telemedicine can even pass on a “facility fee” to the blindsided patient. These are not trivial. The Washington Post tells of a family faced with a $676 bill for a one-hour zoom session with a panel of pediatric specialists to evaluate their child for speech therapy. Then the family got another bill: $857. That was the facility fee — a legal “gotcha.”

Some states, led by Connecticut, are fighting these fees. Connecticut has legislated to limit the fees. Colorado, Indiana, Minnesota, New Hampshire, Ohio, Texas, and Washington have already passed, or are poised to set limits. And the federal government with HR 8133 — Transparency of Hospital Billing Act has similarly set its sights on this “gotcha.” For many hospitals, particularly rural ones, the facility fee is necessary; but the mega-facility fee, even with telehealth visits, strands patients in “collections” limbo. As for insurers, they might cover the fee, or might include it as part of the hospital “deductible.” More fine print to study, more fine print to entrap the patient.

Healthcare has evolved into a game of gotchas, rigged against the patient. The protection — even for those who loathe government — are the Uncle Sams, big and small.

Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email joan.retsinas@gmail.com.

From The Progressive Populist, May 15, 2023

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