‘The charges seem crazy’: Hospitals impose a ‘facility fee’ — for a video visit

Reviewed by Emily Henderson, B.Sc.Dec 17 2021

When Arielle Harrison's 9-year-old needed to see a pediatric specialist at Yale New Haven Health System in June, a telehealth visit seemed like a great option. Since her son wasn't yet eligible to be vaccinated against covid-19, they could connect with the doctor via video and avoid venturing into a germy medical facility.

Days before the appointment, she got a notice from the hospital informing her that she would receive two bills for the visit. One would be for the doctor's services. The second would be for a hospital facility fee, even though she and her son would be at home in Cheshire, Connecticut, and never set foot in any hospital-affiliated building.

Harrison, 40, who works in nonprofit communications, posted on Twitter about the unwelcome fee, including an image of Marge Simpson of TV's The Simpsons with a disgusted look on her face, captioned "GROANS."

She called the billing office the next morning and was told the facility fee is based on where the doctor is located. Since the doctor would be on hospital property, the hospital would charge a facility fee of between $50 and $350, depending on her insurance coverage.

"It's just one of many examples of how this is a very difficult system to use," Harrison said, referring to the intricacies of U.S. health care.

Hospital facility fees have long come under criticism from patients and consumer advocates. Hospitals say the fees, which can add hundreds of dollars or even more than $1,000 to a patient's bill, are necessary to cover the high cost of keeping a hospital open and ready to provide care 24/7.

But it's not only hospital visits that result in facility fees. Over the past several years, hospitals have been on a buying binge, snapping up physician practices that often then begin charging the fees, too. Patients seeing the same doctor for the same care as at earlier visits are now on the hook for the extra fee — because of a change in ownership.

Charging a facility fee for a video visit where the patient logs in from their living room is even more of a head-scratcher.

"The charges seem crazy," said Ted Doolittle, who heads up Connecticut's Office of the Healthcare Advocate, which provides help to consumers with health coverage issues. "It rankles, and it should."

Facility fees for video appointments remain rare, health finance experts say, even as the use of telehealth has soared during the covid pandemic. Medicare has allowed hospitals to assess a small fee for certain beneficiaries who get telehealth care at home during the ongoing national public health emergency, and people in private health plans may also be charged for them.

Harrison, however, was lucky. Doolittle reached out to her after seeing her tweet to offer his office's assistance. In Connecticut, hospitals are prohibited from charging facility fees for telehealth visits.

Connecticut imposed what may be the only state ban on telehealth facility fees as part of a broader law passed in May that was intended to help residents access telehealth during the pandemic. The prohibition on facility fees sunsets at the end of June 2023.

Pat McCabe, senior vice president of finance at Yale New Haven Health System, said he can't explain why Harrison received a notice that she'd be charged a facility fee for a telehealth visit. He speculated that her son's appointment might have been coded incorrectly. Under the new law, he said, the health system hasn't charged any telehealth patients a facility fee.

But such fees are justified, McCabe said.

"It offsets the cost of the software we use to facilitate the telehealth visits, and we do still have to keep the lights on," he said, noting that the providers doing telehealth visits are on hospital sites that incur heat and power and maintenance charges.

The American Hospital Association didn't respond to requests for comment about the rationale for facility fees for telehealth care.

As the pandemic began overwhelming the health system last year, hospitals essentially closed their doors to most non-covid patients.

Telehealth visits, which made up about 1% of medical visits before the pandemic, jumped to roughly 50% at its height last year, said Kyle Zebley, vice president of public policy at the nonprofit American Telemedicine Association, which promotes this type of care. Those appointments have dropped off and now make up roughly 15% of medical visits across all types of coverage.

Before the pandemic, the Centers for Medicare & Medicaid Services severely limited telehealth coverage for Medicare fee-for-service beneficiaries. But with seniors more vulnerable during the pandemic, the agency loosened telehealth rules temporarily. As long as the public health emergency continues, the agency is allowing Medicare beneficiaries in urban areas to receive such care, which was previously covered only in rural areas. And patients can get telehealth care at home rather than having to go to a medical facility for the video appointment, as was previously required. The agency also beefed up covered telehealth services and expanded the types of providers who are allowed to offer them.

Medicare lets hospital outpatient departments bill about $27 for telehealth visits for certain beneficiaries receiving care at home. Patients are generally responsible for 20% of that amount, or about $5, although providers can waive patient cost sharing for telehealth, said Juliette Cubanski, deputy director of the Program on Medicare Policy at KFF.

At the beginning of the pandemic, patients with commercial health plans were often not charged a copay for telehealth visits, said Rick Gundling, a senior vice president at the Healthcare Financial Management Association, a membership group for health care finance professionals. But lately, "those fees have been coming back," he said.

Facility fees for telehealth visits in commercial plans averaged $55 for the year that ended June 30, before insurance discounts, according to data from Fair Health, a national independent nonprofit that maintains a large database of insurance claims. In 2020, just 1.1% of commercial telehealth claims included a facility fee, according to Fair Health. That's lower than for 2019, when the figure was 2.5%.

Experts predict telehealth will remain popular, but it's unclear how those visits and any accompanying facility fees will be handled in the future.

McCabe said he expects the Yale New Haven Health System to reinstitute the facility fees when state law permits it.

"There are real costs in the health system to provide those services," he said.