Costly Care: Hospital mergers with doctors’ offices contribute to patients footing the bill
(InvestigateTV) — For five years, Caren Blanzy regularly received treatment to relieve excruciating muscle pains in her neck.
For five years, she went to the same clinic, saw the same doctors and received the same medical treatment.
And for five years, her insurance paid 100% of the costs until February when the Mecosta, Michigan resident received a bill for more than $1,100, charged as a hospital facility fee.
The clinic she had been visiting became part of a large health system in Michigan, which began charging patients such as Blanzy for seeing doctors at its outpatient facilities.
It’s a growing issue that is saddling patients with unforeseen medical debt.
“For them to change the way they bill it and say it’s a hospital service, as an outpatient, it just didn’t make sense to me,” Blanzy said.
InvestigateTV partners KFF Health News reported that the share of physicians working for a hospital or in a practice owned at least partially by a hospital or healthcare out-of-pocket-limit system increased from 29% in 2012 to 41% in 2022.
The Center for Medicare or Medicaid Service, also known as CMS, stated that when facility fees are covered by an individual’s plan or coverage in connection with essential health benefits provided in-network, cost sharing of those fees is subject to the maximum out-of-pocket limit. However, when not covered by a person’s plan, those fees expose patients to financial risk. It is also likely to come as a surprise to an individual.
Blanzy has cervical dystonia, a neurological movement disorder that contracts your muscles. When she spoke with our national investigative team, Blanzy had to hold her neck in order to keep her head still.
“My head is in constant motion, my shoulder. Going through the pain and the constant motion,” Blanzy said. “It’s what they call a sensory trick. So, my brain is constantly telling the muscles to contract and move. And this helps keep, helps minimize it actually and it helps keep my head straighter.”
She needs regular treatment but now worries about how she can afford it.
I’m pretty good at looking over my statements. I was completely shocked and thought, “There’s got to be some mistake,’” Blanzy said when she saw the $1,100 charge.
“They said it was just some changes they had made. My insurance company said the same and said that it was a revenue code. It switched from billing as an office visit for treatment. And they switched it to outpatient hospital services.”
Blanzy’s clinic is now owned by Corewell Health, a large health system that is the result of a merger in 2022.
At the end of 2023, Corewell announced to patients that some clinics would now be owned and operated by hospitals.
In December 2023, Blanzy received a letter from Corewell Health about the billing changes, stating that she can expect to see two charges on her statements in the future, and the clinic will begin provider-based billing.
The letter also stated that even though the clinic or practice Blanzy went to may be located several miles away from an actual hospital, the facility itself may be owned by the hospital or considered part of it. Corewell’s letter added, “This is common in large health systems where the hospital system owns the space and employs some of the team members.”
Blanzy argues that she did not see the letter when it was sent to her because it only appeared on her My Chart app, an app, she says, she only checks for her lab test results. Blanzy requested the hospital system re-bill her insurance using the “in-office” code as she received in the past, but they refused to do so.
“For them to change the way they bill it and say it’s a hospital service, as an outpatient, it just didn’t make sense to me,” Blanzy said.
InvestigateTV reached out to Corewell Health for an on-camera interview.
Corewell Health declined to comment on her case due to patient privacy and did not explain the billing code. A spokesperson confirmed that in late 2023, the neurology office became a hospital outpatient department owned and operated by Corewell Health Grand Rapids Hospitals. They added that patients affected by the change received a MyChart letter and information about hospital billing.
Hospital Charges for Non-Hospital Care
Looking over Blanzy’s bill, Dr. Elisabeth Rosenthal, Senior Contributing Editor of InvestigateTV partner KFF Health News, said that she is not surprised.
Rosenthal said hospital charges for non-hospital care are a concern she hears from patients all the time.
“What has happened, and we see this all over the country, is the doctor’s office where she got the treatment, which was a Botox shot, was suddenly re-branded as a hospital. So, she was getting a hospital facility fee charge or a hospital code,” Dr. Rosenthal said.
In fact, KFF Health News reported that the share of physicians working for a hospital or in a practice owned at least partially by a hospital or healthcare system increased from 29% in 2012 to 41% in 2022.
The U.S. Public Interest Research Group, or PIRG, says hospital billing codes allow for higher payments to support hospital infrastructure, like intensive care units, specialized equipment and other expenses for fully staffed hospitals. Other costs come in what are typically called “facility fees,” flat fees meant to offset these extra costs of maintaining a large hospital, even if you don’t go to the main building.
“And we see this over and over again. The rebranding of doctors’ offices of outpatient clinics as hospitals for the purpose of billing. And it’s, it’s no different, nothing,” Rosenthal said. “So I think it’s another one of our buyer beware warnings in healthcare.”
Some states are working on solutions. Researchers from Georgetown University found that Colorado, Massachusetts, Maryland, Maine and Washington are trying to cut through the confusion of outpatient facility fees.
Maine, for example, has “a public notice requirement,” where providers must notify consumers online and in signage at the facility whether they charge a facility fee.
New York has what’s called “Direct to Consumer Requirements,” where providers cannot bill consumers for a facility fee not covered by their insurance unless they provide the patient advance written notice.
However, many states do not have specific protections. Some advocates are calling for the implementation of what’s called Site Neutral Payments.
“So, basically the payment is determined by the treatment you got, not where it was given. So, whether it was in a hospital or in an outpatient clinic or a doctor’s office—it’s the treatment that determines the charge. And that just seems much, much fairer than expecting patients to kind of figure out, ‘is my doctor’s office now considered a hospital,’” Rosenthal said.
Critics of site-neutral payment reforms, mainly hospital industry representatives, believe those requirements could lead some hospitals to actually scale back or eliminate services at hospital outpatient departments could lead to decreases in revenue for hospitals, ultimately affecting patient care.
As for Blanzy, she can no longer afford to pay more than $1,100 every three months.
Her treatments have stopped while her contractions and muscle spasms continue every day.
As she waits to see a new neurologist, she is hoping that across the board, transparency in health systems changes so the cost of care is the last thing on a patient’s mind.
“I’d like to see them be more transparent! You know, the bill is mine. I don’t think I can do anything about that. But, I can’t be the only person where this has happened to,” Blanzy said.
InvestigateTV reached out to the Center for Medicare or Medicaid Services, or CMS about the issue. A CMS spokesperson issued the following statement:
When facility fees are covered by the individual’s plan or coverage in connection with essential health benefits provided in-network, cost sharing for those fees is subject to the maximum out-of-pocket limit (MOOP limit).[1]However, when not covered by the individual’s plan or coverage in connection with the provision of essential health benefits, those fees expose patients to financial risk. They are also likely to come as a surprise to the individual. (FAQs about Affordable Care Act and Consolidated Appropriations Act, 2021 Implementation Part 60 (July 7, 2023), available at https://www.cms.gov/files/document/faqs-part-60.pdf.)
Several states have taken, or are considering taking, action to prohibit, limit, or increase transparency around facility fees. The Departments are monitoring this issue, and encourage plans and issuers, and providers and facilities to minimize the burden to participants, beneficiaries, and enrollees that result from imposing facility fees.
While patient privacy protections precludeCMSfrom addressing the specifics of any particular case, we note there are several laws that help to protect a range of people from unexpected medical charges and promote medical cost transparency. For example, the No Surprises Act (NSA) is protecting millions of people from surprise medical bills when they experience an emergency or get care from an out-of-network provider at an in-network facility.
The NSA includes good faith estimate and advanced explanation of benefit requirements. These requirements mean that, under certain circumstances, providers and insurers must give consumers information about expected out-of-pocket costs for health care items and services before care is provided. These requirements are currently in effect for people who are uninsured or don’t plan to use insurance to pay for their care. These estimates are required to include consumers expected out-of-pocket costs for facility fees.
CMS is working with agencies across the Department of Health and Human Services, as well as the Departments of Labor, the Treasury, and the Office of Personnel Management, to implement good faith estimate and advanced estimate of benefit requirements for people who pay for their care with commercial insurance.
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