More facility fee dysfunction: infused drugs

Hospital facility fees are getting more attention these days. When hospitals acquire physician offices they often initiate the lucrative practice of tacking on a substantial facility fee to office visits. This has been happening for some time but payers have been asleep at the switch. It’s only recently that the fees have bubbled up in the public consciousness, and that’s largely because more people have high deductible health plans that actually hit them with part of the costs. It’s also more noticeable when an office switches ownership and the only thing that changes is the name on the door and the facility fee on the bill. I’ve written on the topic here and the Boston Globe had an extensive article over the weekend.

But these article don’t capture the whole facility fee story. As AIS Health describes, when patients have infusions done in hospital outpatient departments rather than physician offices the reimbursable amount may be double for the same service.  The facility fee can be an important component of that difference. And we’re thousands of dollars per visit here; it’s not peanuts. Yet surprisingly it’s common for health plans to charge coinsurance for the cheaper physician office setting and nothing for the hospital, thus encouraging patients to take the hospital route.

I chuckle when I hear free-market ideologues talk about how unleashing the competitive forces of commercial health plans is going to drive costs down, when it has clearly failed to do so in the commercial market. Actually the folks who are doing something about the facility fee problem (according to the Globe report) are the Medicare Payment Advisory Commission and Massachusetts’ new Health Policy Commission.

3 thoughts on “More facility fee dysfunction: infused drugs”

  1. The insurance industry, with all their financial and statistical prowess, you would think, would be ones playing hardball with the hospitals and physicians groups not letting them game the systems.

    However, the more I read, the more I am convinced they are complicit in the collusion to defraud consumers in the deductible arena while the carriers are get some rebates or kick back from the providers.. As in deeper discounts than we are led to believe.

  2. Facility fee definitely is burning a deep hole in the patient’s pockets. Indeed much hallowed principles of free market economy has not worked in case of health care, especially medical services. Prices every where have gone northwards. Unless there is some control from the government, this rising trend will not be arrested.

  3. How can the insurance industry play hardball with most hospitals? In many communities there is one hospital or health system and many insurance companies. If the Insurance industry plays hard ball the hospital doesn’t contract with them. Members demand access to every hospital or they choose a different insurer. Even if it means paying more.

    I over simplified the situtation but most people don’t understand how little power insurers have when the public demand access to providers and bills to be paid with little out of their pocket. Premium, which they usually pay a small portion of and which has already been paid is not factored into individuals care decisions.

    You also need to be careful to remember we have many distinct systems in this country, there is no insurance industry, there are multiple different systems and payors. A self funded plan administered by a TPA does not behave anything like a carrier selling a fully insured product to a small group.

    The self funded plans we administer don’t cover facility fees, majority of the time the facility writes them off or the member doesn’t make the mistake of going there a second time, both proof that free market works just as we would hope.

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