AUGUSTA — Frustrated patients joined consumer advocates and health insurers on Thursday to support legislation to strictly limit – and in some cases ban – so-called “facility fees” that can add hundreds or thousands of dollars to medical bills.

But a representative for the state’s hospitals warned that the fees are critical to the facilities and make it possible for them to provide the care that patients expect.

Facility fees are often included in medical bills to cover hospital operating costs and pay for uncompensated services they provide, hospital officials say. But the fees can add hundreds or thousands of dollars to a medical bill and often confuse and surprise patients, especially when they are tacked onto bills for routine visits such as urgent care or diagnostic tests. Insurance companies sometimes refuse to pay the facility fees. Other times patients end up paying them because they have high-deductible plans.

Senate President Troy Jackson, D-Allagash, sponsored the bill and criticized the practice of sticking patients with unexpected fees for routine care.

“I don’t think it’s right that people are getting these extremely high bills and they don’t know that it’s coming,” Jackson said.

Jackson drafted the bill after a Press Herald investigation revealed that health care providers routinely add surcharges called facility fees that can be hidden in patients’ bills, often charging hundreds of dollars simply because an outpatient procedure or test was performed in a hospital. The newspaper’s investigation, published last August, reported that even patients who research prices and compare costs ahead of time are surprised, confused and frustrated by the charges.

Jeff Austin, vice president of government affairs for the Maine Hospital Association, told the Health Care, Insurance and Financial Services Committee that the bill would be “financially devastating to hospitals” because the fees are the only way hospitals can cover costs for some uncompensated services they provide.

“This bill essentially attempts to install rate regulation on hospitals for the benefit of (insurance) carriers,” Austin said. “The problem is that it sets the reimbursement rate for many hospital services at zero. This will close numerous services all across the state.”

Austin said the way the bill is currently worded would prohibit hospitals from recouping costs in other ways, ending many outpatient services. He did not give a list of services that would be shuttered, but gave one example of cardiac stress test services closing because of the billing restrictions.

The bill would ban facility fees from outpatient clinics and other non-hospital locations. For certain procedures, hospitals also would be barred from charging facility fees.

The Maine Department of Health and Human Services would be required to create a list of services for which patients could not be charged facility fees. The list is not spelled out in the bill, but common screenings such as colonoscopies, blood tests, MRIs, mammograms and other routine care would likely be targeted. The legislation also would require DHHS to submit to the Legislature an annual report about facility fees.

‘ABSENCE OF TRANSPARENCY’

Mike Lauze of Portland submitted written testimony in which he recounted how he received outpatient eye surgery in Portland and was charged three separate facility fees for three distinct procedures during the surgery. The three fees totaled $7,800. Insurance covered most of the cost, but he was on the hook for $850 in facility fees.

“This was on top of the professional fees for those same procedures totaling over $6,200. Before paying multiple facilities fees, I requested the billing manager, his boss, and the CFO considering the multiple charges. They insisted it was right … and ultimately I paid all charges I owed.”

Lauze said he is a supporter of patients sharing in the cost of their medical care. “It just seems the absence of transparency and the whole process by which providers double charge (facilities fees), mark-up in anticipation of only receiving partial payment makes it impossible for patients to be responsible with overall medical care,” he said.

Sierra Kent of Bangor said in her testimony that she went to a hospital emergency room in February with symptoms that she thought could be appendicitis.

“Once I was at the ER, I spent all but a few minutes in the waiting room,” she said in written testimony supporting the bill. “I was given an IV with antibiotics and some Tylenol. … I wasn’t in the exam room for more than five minutes.

“When I got the bill for the ER visit, the total bill was over $9,000, $4,605 of which was a facility fee charge. The balance for me to pay after insurance was $2,507. I was confused by the facility fee charge, so I asked some of my doctor friends about the charge and was told that it was the charge for just walking into the ER.”

Kent said she is trying to set up a payment plan, but can’t afford to make minimum payments. “I’m having other health issues and I can’t work. This is so stressful.

“I know the medical bill is my responsibility because I received the services, but I would have liked to have had a heads up and some sort of estimate of how much my bill was going to be beforehand,” she said. “That may have altered my choice of going to the ER.”

The insurance industry supported Jackson’s bill, with representatives from Anthem Blue Cross Blue Shield, Community Health Options, and the Maine Association of Health Plans advocating for restrictions on facility fee charges.

“Defining and limiting the use of facility fees in Maine, especially concerning consumers covered by private insurance, will increase transparency and improve fairness,” said Dan Demeritt, executive director of the Maine Association of Health Plans, with represents the insurance industry in Maine before the Legislature.

IMPACTS QUESTIONED

Lawmakers peppered advocates with numerous questions about the impacts of passing the bill, and whether it would potentially cause unintended consequences by, for instance, limiting reimbursement rates for independent practices in rural areas.

“This seems more like cost-shifting than savings, to me,” said Rep. Gregory Lewis Swallow, R-Houlton.

Advocates agreed that some cost-shifting would occur, but that it would be more fair to patients to have transparency in billing rather than to be surprised by large facility fee charges.

“People don’t expect to receive facility fee charges for routine or outpatient care,” said Kate Ende, policy director for Consumers for Affordable Health Care, a patient advocacy group.

Advocates agreed that some cost-shifting would occur, but they said cost-shifting already happens, and that it would be fairer to patients to have transparency in billing rather than to be surprised by large facility fee charges.

Consumers for Affordable Health Care published a survey on Thursday that shows that despite almost all Maine people having health insurance, 68% of survey respondents said they are “one major medical event or illness” away from a “financial disaster.”

Ann Woloson, executive director of Consumers for Affordable Health Care, said part of the reason people are worried about medical bills even if they have insurance is they have high-deductible plans. While facility fees are merely one component of the cost of health care, getting charged an unexpected facility fee that costs hundreds or thousands of dollars that either insurance won’t cover, or would go toward a high-deductible plan, would be a financial hardship for many, said.

Those in favor of the bill, including Kim Cook, representing Community Health Options, pointed out that Medicare already substantially restricts how hospitals charge facility fees, and that passing a law in Maine would make billing more consistent among Medicare patients and patients with private insurance.

But Austin, of the Maine Hospital Association, said that “facility fees” are merely a label for the true cost of providing the service.

“There is nothing hidden or inappropriate about hospitals charging for operational expenses such as the hospital, the nurses, the electricity, the supplies, all of the administrative costs related to billing, collections, regulatory compliance, medical malpractice, data collection and reporting, community relations, and so forth. Whether that is called a facility fee, hospital fee, nurse fee, or any other label, hospitals should be allowed to cover our operational costs,” Austin said.

A representative for the Mills administration said the Department of Health and Human Services is neither for nor against the bill, which could change MaineCare billing practices and require additional resources and staff to comply with the reporting requirements and oversight.

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