Hospital facility fees and the health of you wallet; why you should avoid your local hospital for most simple tests.
Have you ever received a bill for a simple test that should have been fully covered by your insurance plan by a hospital, even though this should have been fully covered by your insurance if the test were done anywhere else? As more of us find ourselves with plans with higher deductibles, we are more likely going to get doctor or hospital bills that require us to pay a portion or all of it because of a deductible or co payment. Just like you should look at the bill at your local restaurant prior to paying it off, bills from doctors and hospitals should be viewed the same way especially since billing errors are common.
Without price transparency in our healthcare system, it is difficult to comparison shop for basic tests. The idea of high deductibles forcing people to shop tests, or doctors has little value when there is a lack of transparency in the pricing of those procedures by hospitals, labs and doctors. Insurers have always implied that their negotiated fees will normalize the cost of most procedures and tests, however, the negotiated rate can vary widely from facility to facility, and from insurer to insurer. Most doctors who practice in small groups have their fees dictated to them by large insurers, rather than negotiated in good faith between the provider and the plan. This is forcing more local doctors to give up private practice and join medical large groups or practices which negotiates fees on their behalf with your health insurance company.
Medicare has the most clout of any insurer since they can negotiate prices in all 50 states, and they have the most people insured when compared to many standard non government based insurance plans. Since Medicare uses a system they developed called RBRVS (the relative value scale), doctors are paid based on a services worth relative to the cost of providing the service instead of a price out of thin air as many doctors and hospital (the chart master) fees are created.
The network concept, which most people believe should keep the cost of care reasonable and predictable, no longer has the negotiating clout it once had. Insurers, in their zeal to protect their model have introduced most of their new plans as EPO which does not cover any out of network care, forcing even those with high deductibles to only go to providers in their network. The problem is; it still does not protect you, the consumer from getting an unreasonable bill from a hospital or healthcare facility because many supposedly negotiated fees are absurd, even though the facility is in-network. Even worse; you may go to an in network facility and they may refer some of the work to an out of network provider, resulting in you, the consumer being billed and not covered for those services because they are not in the EPO.
Recently, the Miami Herald reported on the problems with a lack of price transparency. It illustrates the frustrations with the system consumers face when pricing different medical procedures. Consumers care about what they pay and whether they are getting good value for your healthcare dollar. Check out the article here.
The NY Times also reported on a similar problem in that some doctors are gaming the system by showing up during your surgery to assist your doctor (a colleague, friend or group associate), yet their fee is out of network, and they bill you a crazy fee for their participation in assisting your doctor, even though hospital staff of the same caliber who would have been covered and available were never called in to assist. As a consumer, you need to be aware of these abusive practices. Read the article here.
Most tests including sleep studies are the same regardless of where they are done, and yield the same quality of data. An MRI is an MRI regardless of where it is performed, since most machines now have an excellent imaging. Most blood tests are the same everywhere, so the cost should be similar, no matter where it is done. Your insurance plan does supposedly negotiate fees with these companies on your behalf, but that does not mean you will never be billed improperly.
Price transparency would help our system develop competition, because consumers with high deductibles would shop to find the best priced tests. This is quite different than choosing a physician because most are unique and some possess unique skills that offer greater value for your healthcare dollar. Competition among primary providers has increased, causing some to change their model of operation to walk in clinics that charge less, are more consumer friendly and helps keep the price of going to the doctor in check. The growing walk in clinic model is also allowing consumers to price out the cost of going to a doctor, even though many do have contracts with your insurer.
A few years ago, when we had low co-payments, most of us rarely looked at our explanation of benefits from our insurer simply because after paying our low co payment, we were taken care of fully without having to worry about costs. With todays insurance plans, it is more than likely that if a doctor or hospital or other healthcare provider billed you improperly, you are likely going to be billed and will look over that bill. While it is understood that you pay the copayment on your card if you have one, sometimes a hospital will bill twice, once for the test, and then a second time on the same visit for a facility fee.
What is a facility fee? Facility fees are allowed to be charged by the government by hospitals to cover the cost of nurses, staff, etc. For a more detailed explanation, click here http://www.smartmedicalconsumer.com/wiki/Facility_Fees_for_Outpatient_Services.
When should they be charged?; Often when having a surgical procedure, the place you have the procedure charges a facility fee to cover the costs of hosting and running their facility. The problem is that they are appearing in places that they shouldn’t.
An example of this I personally experienced recently was my daughter requiring a lactose intolerance test, which would be paid for in full by my plan with a particular code. As is customarily done, the provider or facility performs the service, they send the bill to the insurer and they are paid the negotiated rate. In the case of my daughter, this was a common simple and accurate test for lactose insufficiency (inability to digest milk products because of a missing digestive enzyme).
When my wife had this done in her doctors office a few years ago, it was paid in full minus our co payment. When my daughter had it done at St. Barnabus Hospital, where the doctor referred her, we got a bill for in excess of $500 which the Hospital representative insists was for the code the doctor requested, even though $500 seemed excessive for this test. According to Oxford Health Plan, they actually billed a facility fee and never billed for the actual test.
After a number of phone calls back and forth to Oxford, the doctor who ordered the test and the hospital representative, I became suspicious that I was being billed for something that is technically legal (the facility fee), except, the test was done in the hospital lab area and there was no rental of any facility. This was not the first time I had experienced this type of overbilling. A number of years ago, I refused to pay a hospital bill because there was no facility, and the hospital was attempting to charge me over $3000 for a 10 minute office visit my wife had in which something was sent to a lab. This was a regular preventative care visit that required a lab test because the doctor decided to take a quick biopsy of the area. The only difference was that this visit required some material to be sent to a lab. The result was that the hospital was found by the insurer to have unbundled and overcharged for the visit. I had offered a reasonable fee for the visit which they refused and in the end they got nothing since they were unwilling to negotiate with me in good faith. Of course, they attempted to use collection agencies to collect but ultimately, I proved that they did not do what they billed for and as a result, they got nothing.
Where does this lead?
Ultimately, since they cannot do the test in the street, they need to do it in an office somewhere, even though it on hospital grounds. Because the test is done on hospital grounds, it is appropriate to charge for the test, but is a facility fee appropriate? Perhaps, if this was a visit to the Emergency Room a facility fee would be expected, except it was for a routine lab test.
It billing a standard test as a facility fee ethical? Of course, the answer is no, and as a consumer, you have every right to fight this. In the case of my daughters test, I will request the hospital recode this and rebill it properly; as a lactose breath test. If they refuse or state that the test was billed properly, then ask for a supervisor. If they continue to insist they did this properly, even though you have an explanation of benefits stating that they didn’t, complain to your insurer. If you do not get any satisfaction, you have one of two options; pay this ridiculous bill very slowly or better yet, refuse to pay and then be prepared to deal with their collection agencies, which is winnable if you are able to prove that they are billing for a service that was never provided, which is a facility fee. Since there was a test done, and you were not given a facility, they can only prove you visited the building, and nothing else since they never billed this correctly.
While this blog post may sound convoluted, and a little like a rant, you as a consumer are entitled to be treated and billed fairly, as you pay your portion of the bill. As we pay more of our bills through deductibles before the insurer pays, we need to act more like consumers who price and question costs because it is our money, instead of an insurers. Hospitals are not entitled to bill improperly, charge much more for a service that would be covered fully by using a different code that does not describe the service that was performed, so they can be reimbursed more than the service is actually worth.
Perhaps, you would like to share your own story. Medical care should be like any other service that we can purchase. We should be able to make sense of what things cost and why and make informed decisions. While, sometimes things are more complicated and more costly than we intended, we should never feel we have been taken for a ride or treated unfairly.
What do you think? As always, I welcome your opinions.