How to (maybe) steer clear of facility fees

Reading time: 5 min

Hi, Claire here.

You might remember my roommate Margot and her battle against more than $14,500 in medical bills.

As we dug in, we noticed $1,100 in what are known as “facility fees.”

Facility fees are like a cover charge for walking in the door at a hospital.

These days, facility fees pop up everywhere — you might see them on bills for everything from a visit to the ER to something as basic as a flu test at the doctor’s office.

That’s because as hospitals buy up doctor’s offices and clinics, they’re allowed to reclassify these facilities as “outpatient hospital departments” and tack these fees on.

And researchers have found facility fees can range up to thousands of dollars.

In Connecticut, the state with the most data on facility fees, they amounted to an average of about $400 per visit in 2021. And they’re often a nasty surprise for patients like Margot.

Honestly, it’s tough to avoid or beat fees like this, but we’ve got two tactics to try.

1. Basic: Get an estimate, and maybe shop around

You don’t always have a choice where you get medical care. Sometimes you head to the closest hospital in an ambulance. Sometimes you need specialized care and there’s only one place you can go for hundreds of miles.

But if you’re in the position to do a little research, ask for an itemized estimate from your hospital or doctor’s office after you book an appointment.

Also called a good faith estimate, this is a breakdown of how much you’ll be expected to pay, and you’re entitled to it at least three days in advance of your visit.

Once you get that estimate, keep your eye out for a facility fee — it might plainly say facility fee or appear under a name like operating room, observation room, etc.

Then, if there is a facility fee, you can look for care somewhere else that DOESN’T charge one1 — or at least charges a more reasonable price.

It may be especially worth looking for independent medical practices or independent surgical centers in your area. Research shows that hospital fees are usually 50% higher than ambulatory surgical centers in the same county. But of course, your mileage may vary.

2. Advanced: Check your insurance

Your insurance might not allow this kind of billing.

Caveat: this tactic involves potentially digging through some really technical insurance documents. What we learned about it came from a nationally-renowned expert in health insurance. But it seems like a tip worth knowing anyway.

For the past few years, Kari Greene has seen a rheumatologist twice a year in a hospital outpatient department. In January 2023, she started noticing a new line added onto her bill for an “observation room” fee.

When Kari first saw the charge, she was confused. She says the room wasn’t anything special. And she was angry because she had to pay those charges out-of-pocket until she hit her deductible.

She contacted her insurance company and looped in the benefits person from HR at work. She says they told her that the hospital was allowed to bill her this way and that she owed the money.

But we shared Kari’s story with Christine Monahan, an attorney and health policy expert who studies facility fees. And Christine found something different — something potentially useful for the rest of us.

Christine combed through Kari’s bills and insurance documents, and homed in on the insurance company’s guide for providers called the reimbursement policy manual.

That’s a collection of documents explaining to providers how-to and how-not-to bill their insurance plan’s members.

The document she dug up, labeled “Clinic Services in the Hospital Outpatient Setting,” had a crucial line:

Do not split-bill clinic-based services, billing part of the service as a facility charge, and part of the service as a professional charge.

Christine told us this clause meant Kari’s insurance didn’t allow hospitals to bill facility fees for the type of visit she had. Somehow the rep from Kari’s insurance had missed it, but if Kari had known this earlier, we think it might’ve helped save her money.

If you’re up for this kind of deep digging into your plan’s policies, you might want to start with a call to your insurance plan’s customer service line and find out what they know.

And if you don’t get good answers, and you’re motivated to do some research, search online for your insurance company’s reimbursement policy manual.2 Then you can search the document for phrases like “split billing” and “facility.”

If you find a policy like the one Christine surfaced for Kari, it could be something you can use to fight back. (And if you try it, let us know?)

Some states are working to limit facility fees

Bad news: hospitals are buying more and more doctors’ offices and clinics, which means the odds are higher that you’ll see a facility fee on your medical bill. In 2022, researchers found that 41% of doctors’ offices were affiliated with a hospital — up from 29% a decade prior.

Good news: it’s a long fight, but some states are trying to rein them in a bit. As of July 2024, at least 20 states have taken some form of action against facility fees.

You can check these maps Christine Monahan and her colleagues at Georgetown’s Center on Health Insurance Reforms put together to see if your home state has any laws regulating facility fees on the books.

What we’re reading and watching:

1. “Throughline” from NPR re-released an episode on the history of America’s wonky health insurance system — it’s a great listen.

2. Earlier this month, an independent group of activists created an archival website called “Restored CDC,” which has all the information from the Centers for Disease Control and Prevention’s website before Trump took office, including useful stuff like info on getting vaccines and gender-affirming care.

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Finally, here’s a photo of Margot, holding our cat, Mira, to calm down after a frustrating call about her medical bills.

We’ve written before about how to stay calm when fighting your medical bills over the phone. And now we’ll add: keep your pets close!

That’s all from me — until next week.

— Claire