Colorado health care consumers and their insurers paid about $13.4 billion in facility fees between 2017 and 2022, according to a legislatively-required state report released last week.
The report estimated that total spending on these types of fees raised about 10% annually during the study period, mostly due to rising health care costs, more clinics charging the fees and population growth. Billing has increased about 6.5% annually in the commercial market and about 14.3% in the Medicare market. It did not quantify how much of that total was paid by patients out-of-pocket.
Facility fees pay for the operational expenses at outpatient facilities and are billed separately from the professional fees that account for the actual professional medical service. They cover costs associated with the building itself, information technology infrastructure and non-medical support staff of the clinic. They have been a controversial subject in recent years as Coloradans face increasing health care costs and hospital systems acquire more outpatient providers, especially in rural areas of the state.
“From the hospital perspective, facility fees are necessary to cover the costs of providing care for underserved and high-acuity patients and the capability of taking all patients regardless of ability to pay,” the report reads.
The report is a result of a 2023 bill that, in addition to commissioning the report, prohibits certain providers from charging facility fees for preventive care and requires them to disclose information about the fees to patients. A steering committee and staff from the Colorado Department of Health Care Policy and Financing used data from the Colorado’s All-Payer Claims Database from 2017 to 2022 to compile the report and estimate the financial impact.
The report notes the “opaque” and “complicated” nature of medical billing practices and facility fees, as well as the lack of billing standardization that creates gaps in data.
“As a physician, I know that when patients start getting higher or surprise bills, they seek care less frequently, and facility fees are only making this issue worse,” Dr. Nicky Joseph, an emergency medicine physician in the Denver metro area and member of the Committee to Protect Health Care, said in a statement. “This report was an important first step in identifying the problem, but now we need Colorado lawmakers to help solve it. By reining in costly facility fees, leaders can improve patients’ ability to seek the care they need to remain healthy and thrive.”
The 10 biggest hospital systems in Colorado account for about 80% of the fees. The most common fees were for services like physical therapy, mammograms and X-rays. Blood work represented 29% of claims with facility fees.
The conversation on whether to rein in facility fees in Colorado could continue when lawmakers return to the Capitol in January.
Patient advocacy groups hope it does.
“Facility fee charges concentrated in hospital systems with the most market power will only make consolidation trends worse, without increasing quality for patients,” Priya Telang, communications manager at the Colorado Consumer Health Initiative, said in a statement. “This report makes it clear: We need legislative action to regulate hospitals’ hidden fees and help consumers.”
But Dan Rieber, the Chief Financial Officer at UCHealth, wrote in a letter included in the report that he doesn’t think lawmakers should base public policy decisions or legislation on the report’s findings. He wrote that there was not enough time, data or participation from stakeholders for it to be reliable.
“The report draws conclusions that are not adequately supported, in particular on the questions of how facility fees affect equity, health care employees, access to care, and quality of care. Despite concerns from Committee members, the report omits important sources that could have provided context on the impact that changes to facility fees could have on access to care,” Rieber wrote. “The report would be more useful to policymakers if it included a comprehensive and balanced review of literature related to these complex issues.”
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