More Facility Fee Dysfunction: Infused Drugs

Hospital facility fees are getting more attention these days. When hospitals acquire physician offices they often initiate the lucrative practice of tacking on a substantial facility fee to office visits. This has been happening for some time but payers have been asleep at the switch. It’s only recently that the fees have bubbled up in the public consciousness, and that’s largely because more people have high deductible health plans that actually hit them with part of the costs. It’s also more noticeable when an office switches ownership and the only thing that changes is the name on the door and the facility fee on the bill. I’ve written on the topic here and the Boston Globe had an extensive article over the weekend.

But these article don’t capture the whole facility fee story. As AIS Health describes, when patients have infusions done in hospital outpatient departments rather than physician offices the reimbursable amount may be double for the same service. The facility fee can be an important component of that difference. And we’re thousands of dollars per visit here; it’s not peanuts. Yet surprisingly it’s common for health plans to charge coinsurance for the cheaper physician office setting and nothing for the hospital, thus encouraging patients to take the hospital route.

I chuckle when I hear free-market ideologues talk about how unleashing the competitive forces of commercial health plans is going to drive costs down, when it has clearly failed to do so in the commercial market. Actually the folks who are doing something about the facility fee problem (according to the Globe report) are the Medicare Payment Advisory Commission and Massachusetts’ new Health Policy Commission.