Healthcare’s hidden costs can take patients by surprise


Like baggage fees for air travel, healthcare may come with hidden costs called facility fees, and not all insurers pay them.

Linda Drake holds the bill with a $210 unexpected charge by the University of Miami Hospital for using its clinic in Deerfield Beach.
Linda Drake holds the bill with a $210 unexpected charge by the University of Miami Hospital for using its clinic in Deerfield Beach.

When a rheumatologist told Linda Drake of Miami that she might have lung cancer, the former smoker did some research and discovered a study for early detection and treatment of the disease with researchers in South Florida.

Drake, 57, decided to participate in the study because there was a $350 flat fee, and she could enroll through UHealth — the University of Miami’s network of clinics and hospitals in Miami-Dade, Broward, Palm Beach and Collier counties.

She could even go to a UHealth outpatient clinic close to work. That clinic, Sylvester at Deerfield Beach, is about a 40-mile drive north from UM’s Miami hospitals, which include UM Hospital, Bascom Palmer Eye Institute, and Sylvester Comprehensive Cancer Center.

Drake’s visit last spring took about one hour, she said, including a CT scan. She saw a technician and a nurse practitioner. About a week later, she received an analysis of the images by a radiologist she never spoke with or met.

The results were negative. Drake breathed a sigh of relief. But a few days later, an unpleasant surprise arrived in the mail: a bill for $210 from UHealth for “hospital services” labeled as “Room and Board - All Inclusive,’’ even though she never set foot in a hospital or spent the night at the clinic.

Her health insurance would not cover the fee. Drake was furious.

“It’s not just the fee,’’ she said. “It’s the way they’ve gone about implementing it that’s offensive.’’

Drake is not alone. As hospitals consolidate into mega health systems, buying physician practices and building urgent care centers and outpatient clinics miles from their main campuses, patients are discovering that – just like baggage fees for air travel and convenience surcharges for concert tickets — some healthcare comes with hidden costs: facility fees.

These are charges that allow hospitals that own physician practices and outpatient clinics that meet certain federal requirements to bill separately for the facility as well as the medical service provided there. Drake was charged the fee because the Deerfield Beach center is owned by UM and considered a department of UHealth’s hospitals.

Fees can range from $50 to more than $200 per visit at some South Florida hospitals, and consumers are seeing them more often as hospital systems build more outpatient centers to create the integrated healthcare delivery models envisioned by the Affordable Care Act.

UHealth officials declined to answer questions about Drake’s experience, but Lisa Worley, a spokeswoman, issued a statement acknowledging the practice of charging facility fees.

“The location of care and related charges follow the location and best and most appropriate care for the individual,’’ the statement read. “UHealth follows established national policies that apply to all office and hospital-based institutions.’’

The fees, also referred to as “provider-based billing,’’ are the result of a change in the federal rules for Medicare that took place about a decade ago. That change allowed hospitals to bill Medicare, the federal healthcare program for the elderly, for physician services separately from building or facility overhead.

Independent, physician-owned offices and freestanding clinics are not permitted to charge the fees. But federal rules say hospitals that charge facility fees for Medicare patients must do the same for all others — even if their private insurance doesn’t cover the fee.

Hospital advocates and healthcare groups say the fees are necessary to help defray overhead, pay salaries, meet federal standards and ensure patients’ access to emergency services, said Erik Rasmussen, senior associate director for the American Hospital Association, a national membership organization representing thousands of hospitals and other providers.

“When a physician practice is owned by a hospital, it has to comply with all the hospital outpatient department regulatory requirements, which is a lot,’’ Rasmussen said.

“If the physician fee isn’t covering the cost of the overhead, and all that the hosptial provides,’’ he added, “then the hospital is going to charge that facility fee because the emergency department doesn’t get magically paid for by fairies.’’

Yet, there’s evidence that consumer anger over facility fees is causing some large hospital systems to reconsider the practice.

In mid-January, during a healthcare industry conference hosted by the University of Miami’s School of Business, the chief executive of Mercy, a Missouri-based conglomerate with 33 hospitals in four states, said the healthcare giant would no longer charge facility fees at acquired physician practices.

Lynn Britton, the Mercy CEO, said he expected the change to cost the hospital system about $40 million a year in revenues. He did not say when Mercy would discontinue the practice, and he declined an interview request.

But Mercy issued a statement which read: “We know facility fees are confusing for patients, especially as they relate to the out-of-pocket costs that patients are asked to pay. Mercy is making plans to simplify our billing practices ... these changes will include phasing out facility-based fees for outpatient services provided in our clinics and other facilities.”

South Florida’s largest hospital system — Miami-Dade-based Baptist Health South Florida — charges a facility fee at its 17 urgent care centers located from Pinecrest to Coral Springs.

The fee is based on the severity of the case and the treatment provided, Karen Godfrey, vice president of revenue management, said in a written statement. Uninsured patients pay a fixed facility fee, Godfrey said, and they are notified of the fee by signs posted at the centers.

Baptist Health’s urgent care centers are licensed under the system’s six hospitals in Miami-Dade and Monroe counties, Godfrey said.

“The facility fees covers a number of costs, including the nursing care provided to the patient, basic supplies, the operation of the facility and clerical support,’’ Godfrey said.

However, Baptist Health does not charge facility fees at its physician practices, or at its more than one dozen diagnostic imaging and outpatient surgery centers in South Florida.

Memorial Healthcare System, the public hospital network for South Broward that operates six hospitals and more than a dozen outpatient and urgent care centers and community clinics in the county, declined comment on their policy on facility fees.

Jackson Health System, Miami-Dade’s public hospital network, charges facility fees at primary care centers throughout the county but not at physician offices, said Ed O’Dell, a spokesman. O’Dell said he did not know the amount of the fee, and that Jackson does not have a written policy for them. He said the fee may differ based on the medical services provided to the patient.

“So blood work is going to be different from nuclear medicine,’’ he said.

O’Dell said the majority of patients treated at Jackson’s primary care centers do not pay the fees because they are uninsured or receiving Medicaid, the state-federal health program for the poor.

Some patients, such as Drake, find out about facility fees only after receiving a bill.

Drake said UHealth never told her she would be charged a separate room and board fee for the visit, and that she even asked the study coordinator, a UHealth nurse practitioner, when they requested her health insurance identification card.

“We had discussed it in depth,’’ Drake said. “When I paid the $350, nothing was said about outpatient facility fee.’’

She called UHealth’s billing department and wrote numerous complaint emails.

At first, she said, they told her “Everybody pays that fee.’’

But after about a month of email exchanges with UHealth, the healthcare system dropped the charge. She’s now is looking for an independent hospital in South Florida collaborating on the study so she can continue to participate — without having to pay a facility fee.

Had she known about the facility fee in advance, Drake said, she would have shopped around.

“I think if people know they’re going to be charged a facility fee their insurance won’t cover,’’ she said, “they’re going to go somewhere else.’’

Read more Healthcare Reform stories from the Miami Herald


    Fort Lauderdale home health firm settles federal whistleblower case.

    A Plus Home Health Care in Fort Lauderdale agreed to pay $1.65 million to the federal government to resolve a federal whistleblower suit that alleged it made kickbacks to doctors’ spouses to get referrals of Medicare patients.

  • Power of Price

    Power of Price: A glossary of healthcare terms

    As if healthcare pricing wasn’t complex enough, try talking about it without running into some conversation-stopping jargon. Words that mean one thing to the rest of the English-speaking world can mean something completely different in healthcare — like a “charge” that isn’t the same as the price.

  • Power of Price

    Healthcare prices: Many moving parts veiled by confidentiality agreements

    The price of a medical procedure can vary greatly for consumers and their employers, depending on the hospital’s operating costs, the patient’s condition, and even who’s paying and how.

Miami Herald

Join the

The Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

The Miami Herald uses Facebook's commenting system. You need to log in with a Facebook account in order to comment. If you have questions about commenting with your Facebook account, click here.

Have a news tip? You can send it anonymously. Click here to send us your tip - or - consider joining the Public Insight Network and become a source for The Miami Herald and el Nuevo Herald.

Hide Comments

This affects comments on all stories.

Cancel OK

  • Marketplace

Today's Circulars

  • Quick Job Search

Enter Keyword(s) Enter City Select a State Select a Category