The hidden junk fee the Biden administration should take on next
The Biden administration has smartly made tackling junk fees – from banks to hotels to live entertainment to rental housing to cable – a priority. Last fall, standing in the Rose Garden at the White House, President Biden declared, “Research shows that without realizing it, folks can end up paying as much as 20% more because of hidden junk fees than they would have paid if they could see the full price up front and compare it with other options. It’s wrong.”
The president is right. Junk fees are wrong.
And now his administration has the opportunity to take on a hidden, often unnecessary, junk fee which gets very little attention but is financially hurting people across the country: facility fees.
Facility fees are charges that are aimed at covering the operational expenses of hospitals. They are billed separately from fees for the services of physicians, nurse practitioners, and other health care professionals. As hospitals have acquired physician practices and other previously independent providers, patients are seeing facility fee charges more frequently – including for services in freestanding physician offices far away from hospital campuses and even telehealth services that can take place in no facility at all.
Sadly, patients are frequently surprised by facility fees, especially for telehealth services or visits that do not involve specialized equipment.
There have been numerous recent news stories that have documented some of the egregious examples. For example, a family in Colorado was hit with a nearly $850 facility fee charge, on top of the professional charges, for a telehealth evaluation of a three-year-old at his home – during which the specialists appeared to be calling from their homes as well. In another case, a 45-minute consultation with a child psychologist resulted in a $503 facility fee. And in another example, an Ohio patient was billed $348 for his visit to an ear, nose, and throat specialist at a clinic. Then, he received a second bill for a $645 facility fee – just for the use of the office where he met his physician. In Ohio and Maine, facility fees are added to around 80 percent of bills for heart disease screening sent to each state’s largest insurer.
Last fall, the chair of the Federal Trade Commission (FTC), Lina Khan, said, “junk fees function as an invisible tax that quietly inflates prices across the economy.”
“Junk fees function as an invisible tax that quietly inflates prices across the economy.”
That is certainly true. And it is why we have urged the administration to move forward with its proposed ban on facility fees for telehealth and other outpatient services. We also have urged the FTC to finalize its proposed rule on junk fees, which would be an important step to rein in these charges.
Because the plain truth is facility fees are just another medical debt trap. And only exacerbate an already uniquely American problem: the medical debt crisis.
The need to act could not be greater. Facility fees are increasing faster than other categories of health care spending, they are contributing to the country’s medical debt crisis, and they impose the greatest burden on historically disadvantaged communities. And we know that due to racism, classism and other forms of oppression, the greatest burden is felt by Hispanic, American Indian and Alaska Native, and Black individuals who are most likely to be uninsured and therefore bear the full cost of facility fees. Furthermore, Black and Hispanic individuals are less likely to report having a primary care provider and more likely to report receiving routine health care in an emergency department, where facility fees are significant and unpredictable.
We also know that due to consolidation and widespread hospital and physician closures and access deserts, people in rural areas depend on telehealth services even more. And facility fees hit them disproportionately.
That is why addressing facility fees is not only an economic issue, it is an important step in the direction of race and health justice.
Due to the immediate need for action, over thirty local, state, and national organizations – representing a range of advocacy groups focused on medical debt, disability rights, health equity, and economic justice – have urged the FTC to take action on junk fees to protect patients from hidden, misleading, and excessive facility fees.
The administration’s laser-like focus on junk fees is to be commended. They are saving millions of people money and protecting people from predatory practices.
Millions of people across the country, particularly those that are already struggling due to rising costs and inflation cannot afford to wait much longer.
