Protecting Patients: New States Laws Target Surprise Facility Fees

What’s new: As legislatures wrap-up around the country, three new laws add to a growing list of state patient protections against surprise hospital facility fees — giving other states a path to fighting back for patients.

Catch up: Hospital systems are rapidly buying up doctor’s clinics and imposing hospital-level billing. Patients in Texas and around the country have been caught off guard and left on the hook for hundreds in unexpected facility fee charges.

Health economist Vivian Ho at Rice University had this to say:

“I just find that so disappointing. You know, patients realize health care is complicated and it’s complex. And, you know, they are willing to pay more for a service that has higher value. But in this case, providers have just found a different way to collect more money. It is collecting a facility fee where there’s no additional value over and above what you were getting before when you were paying just the professional fee. It’s just not right.”

Why it matters: Surprise facility fees are the latest addition to out of control health care costs that result in higher out-of-pocket spending for patients and increased premiums for employers and families. States are increasingly becoming aware of the need to step in to set limits on abusive provider pricing schemes.

Recent state action to protect patients from facility fees

• Connecticut extended its COVID era ban on facility fees for telehealth that was set to expire, while also banning facilities for simple non-emergency physician visits.
• Maine lawmakers now require health care claims to now identify the physical location where a service was provided—including hospital off-campus locations—a move aimed at getting a handle on when facility fees are applied outside of a hospital.
• The Maryland Health Services Cost Review Commission is now tasked with studying outpatient facility fee billing aimed at expanding notice requirements.

Other states protections put in place in recent years include:

• An Indiana law aimed at addressing surprise facility fees and other dishonest billing tactics, limits the use of hospital billing for services provided off a hospital’s campus.
• Ohio and several other states ban facility fees for telehealth visits and both New York and Colorado limit facility fees for preventive services.

Congress weighs in: U.S. House and Senate proposals focused on broad health reforms include provisions to address surprise facility fees.

• Legislation moving in both chambers includes site of service billing transparency to ensure medical bills match the true location of health care services.
• The House passed the?Lower Costs More Transparency Act of 2023 which would address facility fees added for clinician administered drugs, like chemotherapy treatments, saving Medicare roughly $3.7 billion over 10 years and cutting copays by about $40 per patient.

Texas tie in: In 2021, Texas lawmakers stood up against abusive facility fees at freestanding ERs for drive-thru COVID tests after several reports of quick drive through nose swabs left patients with thousands in facility fee charges.

Facility fees were originally intended to help cover the overhead cost of hospital ERs that must stay open at all hours to meet patient needs. But hospitals are now expanding the fees to routine, non-emergency health care visits, even for telehealth.

What can Texas do?

• Establish facility fee billing transparency to ensure medical bills match the true location of health care services and protect patients from dishonest billing.
• Protect patients from inappropriate & excessive surprise facility fees for telehealth & preventive care.
• Patients shouldn’t have to pay more for life-saving drugs just because of where they received them. Texas should protect patients from excessively priced clinician-administered drugs, like chemotherapy. It’s simple. The same service, same price, regardless of where it occurs.

The bottom line: Texas was a leader in rooting out surprise billing with state-level reforms that pushed Congress to take action. Yet again, new surprise facility fees are driving the health care cost epidemic, and Texas must join other states in taking action.

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