Regulators consider requiring hospital ID numbers to fight facility fees

Insurance regulators from states around the country are looking to Colorado for an idea about how to fight one of employers’ growing health care cost headaches: hospital “facility fees” added to bills for ordinary community-based care.

The problem is coming up more and more often as hospitals buy medical practices. Hospitals often add facility access fees to bills for inpatient care, contending that even providing an aspirin tablet for an admitted patient involves elaborate, expensive infrastructure.

In some cases, hospital-owned “health care systems” now add inpatient-style facility fees to bills for preventive care and routine sick care provided by hospital-owned primary care offices and OB/GYN offices. Facility fees can cause prenatal care visits, well-baby visits or adult checkups that once cost less than $500 to lead to bills of $10,000 or more.

Colorado has tried to fight the facility fee problem by requiring hospitals’ “off-campus” facilities to get and use their own “national provider identifiers,” or ID numbers, so that self-funded employer health plans, health insurers and other payers can see whether big facility fees reflect care provided at a hospital or a well-baby checkup at a medical office that happens to be owned by a hospital.

State regulators talked about the Colorado facility ID number approach Tuesday in Chicago, during the health insurance Regulatory Framework Task Force session at a National Association of Insurance Commissioners national meeting.

What it means:

Your employer clients and their plan insurers or administrators could soon see more bills that distinguish between care provided by hospitals and care provided by ordinary medical offices owned by hospitals.

The presentation

Rachel Swindle, a research fellow at Georgetown University’s Center on Health Insurance Reforms, included discussion of the Colorado facility ID approach during a Regulatory Framework Task Force presentation that looked at five major types of state responses to facility fee concerns.

Some states prohibit certain types of facility fees, require cost disclosures for the patients or prohibit providers and plans from making the patients pay facility fees for care provided by hospitals’ “off-campus facilities,” according to a copy of Swindle’s slidedeck included in a task force meeting packet.

Several states require annual facility fee billing reports.

Related: States crack down on hospital ‘facility fees’ for routine care, like colonoscopies

The Colorado facility ID approach can help employers and other payers understand their bills, Swindle told the task force members.

“One challenge Colorado has faced, however, is tracking the affiliations between different locations,” Swindle said.

Colorado has tried to solve that problem by requiring hospitals to report every year on the off-campus facilities they own and have recently acquired.

Benefits groups’ perspective

The Business Group on Health has addressed the facility fee issue by stating that federal regulators “should require transparency of prices across all settings and provider types, including facility fees for hospital-owned physician services and rates for out-of-network services at in-network facilities.”

Janet Stokes Trautwein, the former CEO of the National Association of Benefits and Insurance Professionals, told the House Ways and Means health subcommittee in a comment submitted in May 2023, that it sees the facility fee issue as a major concern.

“Facility fees are believed to be the primary factor in the rapid growth in emergency health care costs that we have seen over the last two decades,” Trautwein wrote. “On average, from 2004 to 2021, facility fees increased a staggering four times faster (531%) than professional fees (132%) for emergency department evaluation and management service.”

An outside analysis showed that keeping health care providers from charging more when care is provided at certain kinds of sites than at others could save private health plans and the plans’ enrollees $152 billion over 10 years, Trautwein wrote.

Congress

The House is considering at least two bills that could create federal requirements for hospitals’ off-campus facilities to get their own ID numbers.

One is the Lower Costs, More Transparency Act bill, which was introduced by Rep. Cathy McMorris Rodgers, R-Wash., which has two Republican co-sponsors and one Democratic co-sponsor.

Another is the Promoting Access to Treatments and Increasing Extremely Needed Transparency Act of 2023 bill, which was also introduced by McMorris Rodgers. That bill has 46 Republican co-sponsors and 42 Democratic co-sponsors.