Facility Fees: Another Medical Debt Trap

The Biden administration has made tackling junk fees a centerpiece of their agenda. In recent comments to the Financial Trade Commission (FTC), Community Catalyst has focused on a type of junk fee that often surprises patients: facility fees. 

Signed by 33 local, state, and national organizations – representing a range of patient advocacy groups focused on medical debt, disability rights, health equity, and economic justice – the comments urge Lina M. Khan, Chair of the FTC, to protect patients from hidden, misleading, and excessive facility fees.

What are Facility Fees
A woman with brown hair fills out forms related to her medical care. She is wearing a pink top and holding a pen while filling out forms next to her laptop. She is seated in the center of the photo at her kitchen table.
What are facility fees?

Facility fees are charges that are aimed at covering operational expenses of hospitals. Facility fees are billed separately from professional fees, which charge for the services of physicians, nurse practitioners, and other health care professionals.

However, facility fees are increasing faster than other categories of health care spending. And often, patients are surprised by facility fees, which can significantly increase out-of-pocket costs and lead to medical debt.  

Independent physician offices do not charge facility fees. When physician offices are acquired by hospitals or health systems, however, those offices may begin adding a facility fee on top of the regular physician charges. As hospitals are more rapidly acquiring physician practices and other previously independent providers, patients are seeing facility fee charges more frequently and unnecessarily – such as for services in freestanding physician offices and telehealth services.

This additional fee often results in confusion for patients when they visit a longstanding provider that has been acquired by a health system, many times unbeknownst to the patient.

Background
Background

Hospitals typically bill separately for: (1) professional claims; and (2) facility claims. Professional claims cover care provided by health care professionals, such as physicians and nurses. The facility claim is intended to cover the additional costs of providing care in the hospital, such as the cost of staffing an emergency room 24 hours a day and maintaining emergency medical equipment.

Independent physician offices do not charge facility fees. When physician offices are acquired by hospitals or health systems, however, those offices may begin adding a facility fee on top of the regular physician charges. This additional fee often results in confusion for patients when they visit a longstanding provider that has been acquired by a health system, many times unbeknownst to the patient. Indeed, the Biden administration has emphasized: “These fees are often a surprise for consumers.”

Patients are also frequently surprised by facility fees for telehealth services or office visits that do not involve specialized equipment. News stories have documented many egregious examples.

For instance: 

  • A telehealth evaluation of a three-year-old at his home – during which the specialists appeared to be calling from their homes as well – resulted in a facility fee of $847.35, on top of the professional charges. 
  • In another case, a 45-minute consultation with a child psychologist resulted in a $503 facility fee. “There were no vital signs, there were no titanium screws, there was no surgery. This was literally just a lamp and a couch,” the child’s father noted.
Facility fees are charges that ostensibly cover operational expenses of hospitals. Facility fees are billed separately from fees for the services of physicians, nurse practitioners, and other health care professionals.
Community Catalyst and U.S. PIRG Education Fund partnered to compile this one-stop guide to understand and fight your medical bills.  
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Resources

Resources

Remarks at the FTC Virtual Hearing on Proposed Rule Prohibiting Junk Fees

On April 24, 2024, Miriam Straus, Senior Policy Analyst at Community Catalyst, testified at the Federal Trade Commission’s virtual hearing on the review of unfair or deceptive fees, commonly known as junk fees.

Read more here

The hidden junk fee the Biden administration should take on next

The plain truth is facility fees are just another medical debt trap. To date, 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.

Read more here

Comments to the FTC Regarding Unfair or Deceptive Fees

Facility fees are increasing faster than other categories of health care spending. Patients are often surprised by facility fees, which can significantly increase out-of-pocket costs and lead to medical debt. As the FTC seeks to limit unfair or deceptive fees – particularly those that provide little or no value to the consumer – it is appropriate and timely to include facility fees, which contribute to rising health care costs and the medical debt crisis facing our country. We urge the FTC to protect patients from hidden, misleading, and excessive facility fees.

Read more here

Health System Financing

No matter how hospitals and health systems are financed and reimbursed, it should not come at the expense of patient affordability. Rather, it should improve the care experience for patients and their families, increase staff well-being, help to ensure equity, and improve health outcomes. Transformational policies and practices that center the needs and experiences of people who are often most hurt by the health care system can help.

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Medical Bills: Everything You Need to Know About Your Rights

Your one-stop guide to understand and fight your medical bills. Health care prices are at an all-time high and continue to grow. As the cost of health care has grown ever higher, you may find your personal budget strained. That means — even if you have health insurance — more medical bills become your financial responsibility. This guide is meant to help you navigate medical bills and other common charges in health care settings — like when you need emergency care, are scheduling care at a hospital, or are faced with unaffordable medical bills. Simply select the subject that applies to you to learn more.

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An Action Toolkit for Communities Facing Hospital Consolidation

This toolkit was created as a guide for people who are facing proposed changes in the health care services provided by their local hospital or health system. Hospital mergers, downsizings or closures that eliminate services are generally driven by financial pressures and do not reflect the needs and desires of the communities they are licensed to serve. So, it falls to community members like you to speak out when your community’s access to care is threatened.

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A Compendium of State Policies to Curb Hospital Prices and Reduce Medical Debt

Health care in the United States is the most expensive in the world by far and the reason is simple – health care providers keep increasing the prices of services. This state policy compendium project takes a cross-country view into how different states are using, or not using, policy levers at their disposal to slow heath care services price growth and therefore reduce medical debt. By collecting these policies in one place, advocates can compare the policies of different states and identify where their state government can be pushed to improve.

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Comments to CFPB Small Business Advisory Review Panel Regarding Removal of Medical Debt from Credit Reports

Community Catalyst submitted comments to the Consumer Financial Protection Bureau (CFPB) in strong support of proposals under consideration for the removal of medical debt from credit reports during the Small Business Regulatory Enforcement Fairness Act (SBREFA) process.

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Principles for Improving Community Health and Economic Stability Through Hospital Policies

Hospitals are important anchors in their communities and an integral part of the health care safety net. Despite this, their financial assistance and billing/collection policies frequently exacerbate existing inequities for systemically-excluded communities. It is critical that hospitals establish financial assistance policies (FAP) through a racial justice and health equity lens. We suggest five principles to guide advocacy efforts in campaigns to ensure that hospital policies promote economic security and preserve access to care for all: Equity, Transparency, Affordability, Inclusivity and Accountability. These principles were co-designed with health advocates from more than a dozen organizations in five states.

Learn more here