Price transparency in healthcare? Despite reforms, still lacking. Part 2

Back in January I told you a true story about the healthcare adventures of Sally and Bob. Like all good serial adventures, it helps to read the first chapter before turning to the next installment.

imageIn Part One, Sally and Bob discovered the tyranny of what is affectionately known as the “facility fee”. It is not uncommon for hospitals and clinics affiliated with teaching hospitals and big university systems to charge a facility fee in addition to the usual and customary fees that one might expect when going to see a doctor. As Sally discovered, the facility fee often exceeds charges from the doctor. She also learned that it is nearly impossible to find out how much the facility fee will be ahead of time because how much is charged seems to be connected to one’s ability to pay. It’s not until the billing office performs a wallet biopsy and the bill is run through insurance (which usually doesn’t cover facilities fees) that you learn how much you will have to pay. In Sally’s case, the facility fee was $225 which brings me to Part 2 of this misadventure.

Sally knew that after her original consultation, the doctor and his residents would review Sally’s medical record and put their heads together to render a decision on what if anything else, needed to be done. Sally was told to expect a phone call from the specialist. Weeks went by and she heard nothing. She called the clinic several times. It seems there had been a delay in getting her medical records from the community dermatologist and other doctors she had seen. Finally, after many more weeks, Sally was notified that the specialist was ready to speak with her. Since the university medical center is a bit far from her home, and traffic and parking are always a nightmare, Sally asked if the doctor could simply tell her what he had decided by phone. “No”, she was told, “She needed to come back to the clinic in person.” If you read Part One of this story, you’ve probably already figured out where this is going.

Sally made an appointment and went once again to see the dermatology specialist and Big U clinic. She was told that there really wasn’t anything more that needed to be done. Most likely, the problem she was having had been fully addressed by her community dermatologist and the other specialists she had seen. In addition to the very brief discussion Sally had with the university specialist, she also received an x-ray of the area in question. She paid for parking and drove home.

Weeks later the customary explanation of benefits document from Sally’s insurance company arrived at her home. There was a charge for the x-ray, a $190 charge for the doctor visit, and a facility fee of $225.

Sally’s two visits to Big U clinic generated $550 in “facility fees” that Sally’s health insurance plan will not discount or cover at all. In fact, since Sally has a high deductible health insurance plan through her husband’s employer, Sally and Bob will pay most all of the fees from Big U right out of pocket.

Do you think Sally will ever go back to Big U for her medical care? Sally says, “Only if there is absolutely no other option, and even then, under protest.

Bill Crounse, MD    Senior Director, Worldwide Health       Microsoft

Comments (2)
  1. John Smith says:

    Perhaps a publically available list of providers that charge a "facility fee" should be hosted at various connections points between potential patients and the health system, such as State Health Departments, Hospital groups, private providers, health/information advocates etc.

    Vote with your feet & your wallet.

  2. John Callow says:

    Unfortunately, facility fees are another opportunity for healthcare organizations to increase revenue without hiring additional staff or making meaningful changes to their services. For example, a physician practice group may partner with a hospital to archive "hospital outpatient department" status and eligibility for provider based billing i.e. charging facility fees. For better or worse, it is legal and usually a sound business decision.

    In a broader sense; facility fees, unnecessary visits, and other activities to increase revenue without improving patient care or health outcomes are a symptom of the broken "fee for service" model. Hopefully we can reduce this type of organizational behavior with increased use of capitation/ACO and bundled payment models. Until we change the perverse incentives we may not see better behavior.

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