Hospitals charging a “Facility Fee” for using their space?

This may sound like something new you are being hit with when having either a life health emergency or just an issue that’s a little above what your doctor can do for you.

You may have seen a small news article in the past on this or heard it in passing but to elaborate on the visiting and having the “hospital experience” here are some things you REALLY NEED to be aware of.

This is being explained to you as eventually if you do not pay the bill owed (even if they don’t tell you about it) after 120 days it may go to a collection company and be placed on your credit report and possibly drop your credit score up to 70 points. And then when you make the attempt to rectify the issue you are bombarded with such ignorance it is hard to believe as now you are “in the system” and have no clue how that system operates and have to enlist the services of a credit repair specialist to help navigate that system.

The medical “business” in my opinion is literally the most incompetent business I have even seen in my life. The utter stupidity of how they run their “business” more specifically to the billing department of that business is mind blowing.

So now that my rant is over lets go over a little education on how it works so you can be at least a little prepared for when it happens as unfortunately your help is never an if it happens as more of a when it happens.

Logic would dictate if you have to go to the ER then hopefully once things are better you are presented with a bill when you leave for let us say $10,000 and your insurance covers 80% then you are responsible for the remaining balance, minus a co pay.

Seems simple, right? Actually many times bills don’t get submitted on time so “other bills” trickle in and it seems that anyone that stuck there head in or picked up your chart and looked at it is sending you a bill.

What actually happens is most (not all) are looked at as contractors and not direct employees at the hospital so each one of them bill you for their service. Now there are many that belong to groups so you get a bill from “fake name medical group” which included the doctors, anesthesiologist. But then there is any specialist that may have looked at you who belong to “Doctor fake medical Specialist” and they send in their bills.

All you know is you went to ONE facility and your just looking for ONE bill that lists everything done to you, not an impossible thing to expect, right?

Now you have to hope (which is something you’re not thinking about) that ALL of those bills are being coded correctly and submitted on time to your insurance company. Nothing wrong to expect someone to do their job correctly, but people are human and mistakes do happen, you just hope the mistakes are on little ones not the $10,000 bill itself.

BACK to the actually blog topic, you would think that the bill you receive for all the services includes the “renting” of the hospital “property” since when you go to a restaurant and get a burger the $9.00 burger doesn’t cost $9.00 but it includes the cooking of burger, transportation of that meat to you the service, the location and all things included with the enjoyment of that burger.

Wouldn’t the same thing occur for the hospital? Logic would dictate that but systems in America are anything but logical and always seems to target the individual or little guy as they are the ones who cannot fight back.

Now this blog isn’t here to tell you how to fix this because you cannot, there are designed to educate you so you are not blinded sided.

One thing I have learned in my over 12 years in credit is the moment I come across something I have not seen before I dive in to become fully educated on the subject as very often it’s a sign that many others will encounter these problems and issues and as the credit expert I should and need to be prepared to help address the situation and know how to advise my client to the options available to them.

So let’s now FINALLY go into some detail about this “Facility Fee”.
The nickname is “room fee”.
Called “provider-based billing,” it allows hospitals that own physician practices and outpatient clinics that meet certain federal requirements to bill SEPARATELY for the facility/location as well as for physician services.

Because hospitals that bill Medicare beneficiaries (for example) this way must do so for all other patients, facility fees affect patients of all ages.
Doctors’ offices owned by physicians and freestanding clinics are not permitted to charge them.

Unlike other add-ons that have sent people into a rage over billing like:

– baggage charges on airlines
– surcharges for concert tickets
– resort fees tacked on by hotels

Facility fees, which range from about $25 to hundreds of dollars per visit, may involve a service that is a matter of life and death.

WHY, you ask? One billing consultant has estimated that the fees could generate an additional $30,000 annually per physician for hospitals. And as you know hospitals certainly have more than a dozen doctors of course so you do the math…..

Alan Sager, a professor of health policy and management at the Boston University School of Public Health, facility fees are a “ tax on sick people” and reflect the “financial anarchy that pervades health care in the U.S.”

“They are the latest gimmick to generate additional revenue for hospitals,” whose profit margins have sagged in the past two years as the economy has nosedived, Sager said.

“It’s like a barber saying, ‘That’ll be $20 for a haircut and $10 for sitting in my chair,’ ” said Wisconsin state Rep. Chuck Benedict, a Democrat.

Here are five things to know about “facility fees”:

1. They allow a healthcare organization to bill patients a service charge for the patient’s use of hospital facilities and equipment. In MOST cases, a patient may be responsible for the service bill if their insurance declines to pay or if the patient has a high deductible health plan. Hospitals can charge patients facility fees if they see physicians who work in an office that is owned by the hospital.

REMEMBER— when you “sign in” you fill out a form that says whatever your insurance doesn’t pay YOU WILL!

2. Ultimately, the fees help offset costs to operate hospitals and outpatient clinics, along with access to support staff and physicians hospitals state.

3. Hospitals charge facility fees for outpatient services performed by employed physicians that independent physicians do not charge according to the Medicare Payment Advisory Committee.

4. Facility fees have been a hot legal topic and remain controversial. Consumers have increasingly complained about unexpected provider-based billing. The practice has spurred federal regulators to examine the procedures in place for hospital service charges and pricing transparency. Federal regulators, concerned with rising care costs and consumer complaints, plan to review the impacts of provider-based billing.

5. President Barack Obama signed legislation outlawing provider-based billing at off-campus outpatient facilities; however the law does not apply to existing outpatient centers where most people get their services.

SO, in summary to this crazy educational blog this week, If you visit a doctor at a hospital-based office, be aware that hospitals sometimes charge a facility charge in addition to the physician, x-ray and laboratory charges. These charges can range from $25 to hundreds of dollars per visit.

Physicians that practice in free-standing non-hospital-based settings usually include these overhead costs into a single office visit bill.

The practice depends on the hospital’s ownership structure, choice of approach and contracts with insurers. In part because of lawsuits and new laws in some states about transparency of these fees, more providers are prominently displaying signs in their offices if they charge a facility fee.

When you visit your doctor, ask if you will be getting a separate bill from the hospital. If the doctor’s office says you will, let the staff or doctor know that you are not happy about the additional charge. If providers hear from members that they are not pleased about these charges, they may be able to reduce or eliminate them.

• Ask your doctor whether he or she practices at a non-hospital based setting where there would not be a facility charge. Consider booking your visits at these alternate locations.

• Review the Explanation of Benefit (EOB) you will receive from your health plan if a service is subject to a deductible to see if the deductible charge was the result of a hospital facility charge. If you are not sure, contact your health plan. If you receive a bill from a hospital for this charge, call the hospital and express your concerns about the charge. Sometimes hospitals will respond to these complaints.


Feel free to contact me at and ask about my book “The Real World of Credit” to learn A LOT more of how the system works if you are thinking of fixing your own credit.

Understanding how the system works is half the job!