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Gothamist: New Bill Would Prevent NY Patients From Getting Stuck With Hidden ‘Facility Fees’

January 31, 2020

When Celene Ryan first received a bill for her visit to Kings Physician Services in Park Slope last August, the charges seemed reasonable. The bill, which came to $193.39 after insurance, detailed exactly what she was being charged for: two ultrasounds that her OB-GYN had recommended she get to investigate the source of her abdominal pain.

But a couple of weeks later, another, more mysterious bill showed up charging Ryan an additional $773.46 for the same appointment. This one was from NewYork-Presbyterian—the health system that owns Brooklyn Methodist Hospital, where Kings Physician Services is located, and didn’t list any specific medical procedures.

“I feel like I’m being scammed,” Ryan said. “I feel like I’m being charged for nothing. I already paid the clinic for the services I went in to have done.”

Ryan is not alone. Many patients get hit with a facility fee, meant to cover overhead costs, a few weeks after visiting a hospital or a hospital-owned clinic or doctor’s office. In Ryan’s case, the clinic she visited was colocated with Brooklyn Methodist Hospital, but a facility fee can pop up even when the health care provider a patient visits is nowhere near a hospital campus. Regardless of where it originates, this extra fee often comes as a surprise.

A new bill in Albany known as the Patient Medical Debt Protection Act (A. 8639/S. 6757) would prohibit New York hospitals from sticking patients with these extra charges. Facility fees would be banned altogether for preventive care and insurers would be required to negotiate with hospitals over any remaining facility fees, so they don’t fall on the shoulders of patients like Ryan. 

This restriction on facility fees is among the most ambitious pieces of the legislation, which, incidentally, seeks to address several of the issues patients have brought to the attention of Gothamist, WNYC, and ClearHealthCosts in recent months through our joint health care cost transparency project, #PriceCheckNYC

In addition to restricting facility fees, the bill would also:

  • Require hospitals to send patients all charges in a single medical bill written in plain language
  • Standardize the financial liability forms patients are asked to sign before getting care
  • Shrink the window for hospitals to sue patients for defaulting on their medical bills from six years to two years
  • Expand New York’s surprise billing law to protect patients from paying for unexpected out-of-network care that results from misinformation, such as an out-of-date list of doctors on a health plan website
  • Create a uniform hospital financial aid form for low-income patients
  • Require hospitals and insurers to submit data for the health care cost comparison website Governor Andrew Cuomo says he’s planning to set up for consumers (which, it should be noted, was first greenlighted through legislation passed nine years ago and has yet to materialize)

Since being introduced in the fall, the Patient Medical Debt Protection Act has gained 32 sponsors in the Assembly and 13 in the Senate.

“I think we can make life simpler for people and make the financial burdens of health care less burdensome,” said Assemblyman Richard Gottfried, chair of the Assembly Health Committee. 

“There are limits to what you can do with this kind of legislation,” Gottfried added, “and, of course, with the New York Health Act, the world would be a different place. But meanwhile, we should get this medical debt situation straightened out.”

Both Gottfried (D-Manhattan) and Senator Gustavo Rivera (D-Bronx), the primary sponsors of the Patient Medical Debt Protection Act in the state legislature, maintain that the real solution to New Yorkers’ health care woes is to pass the state’s single-payer bill, the New York Health Act, which would shift patient spending away from insurance premiums and medical bills and toward taxes instead. There’s still a shortage of political will to pass the New York Health Act in Albany, however. And while a federal health system makeover via Medicare for All could one day become a reality if Senator Bernie Sanders or Senator Elizabeth Warren is elected president, consumer advocates say there are plenty of ways to cut back on hidden fees and predatory practices in the current system.

The governor’s office has not responded to a request for comment on the Patient Medical Debt Protection Act, although he has generally signaled support for its goal of boosting consumer protections in health care. His proposed budget for fiscal year 2021 wouldn’t do anything to restrict facility fees but it does include a measure similar to the one in the Patient Medical Debt Protection Act reducing the timeframe for a hospital to sue a patient over medical debt (he opts for a window of three years instead of two years). He also proposed setting up a “health care administrative simplification workgroup” to report on ways to make health care billing and administration more straightforward.

Some aspects of the Patient Medical Debt Protection Act, which legislators drafted with input from the patient advocacy group the Community Service Society of New York, will likely face pushback from hospital lobbyists.

“We have concerns with the legislation as written but look forward to working with the legislature and the governor’s office to increase meaningful transparency,” Bea Grause, president of the Healthcare Association of New York State, which represents hospitals and other health care providers, said in a statement.

Neither her group nor the Greater New York Hospital Association has weighed in publicly on the facility fee restrictions or other specific aspects of the bill yet. But they are both among the hospital groups nationwide that have vehemently opposed federal efforts to reduce Medicare spending by creating “site-neutral” payments for outpatient services, so that hospital-owned clinics and doctors’ offices don’t get paid so much more than facilities not owned by hospitals.

Asked about potential hospital opposition to facility-fee restrictions, Gottfried cynically pointed out, “The bill doesn’t say hospitals can’t include the multi-million-dollar salary of their CEO and other costs in the bill [they send patients]. Hospitals, like every other business, have always done that. What we’re saying is, make it part of the price and not something that hits you [as a separate charge] long after you’ve left the hospital.”

New York isn’t the only state that’s taking up the issue. Connecticut successfully banned certain types of facility fees and now requires hospitals to be more transparent about the charges. And Massachusetts Governor Charlie Baker introduced a bill to restrict facility fees in December.

Eric Linzer, president of the New York Health Plan Association, which represents health insurers, said he thinks many of the provisions in the Patient Medical Debt Protection Act are “thoughtful, common-sense measures to protect consumers.” However, he noted that he’s concerned about certain technical aspects of the bill, including language that he says could require insurers to pay excessive fees to out-of-network doctors and ambulance companies. He says those costs shouldn’t fall on patients, but if insurers are required to pay instead, the increased spending could translate into higher premiums for health plan members.

“We’d want to talk to consumer groups about it to give them some thoughts on how to tighten that up,” Linzer added.

Senator Rivera acknowledged that the initial proposals included in the legislation will likely serve as a jumping-off point for discussions with a variety of health care stakeholders.

“We will be having conversations for the rest of the session,” Rivera said. “We may have disagreements about how the bill is organized, but [hospital and insurance groups] may also have other things they can bring to the table so we can address the issue of medical debt. I try to engage with all stakeholders.”

Yet discussions about the bill may take some time to get underway in earnest So far, the Patient Medical Debt Protection Act has been overshadowed by the fact that Cuomo is revamping his Medicaid Redesign Team to find $2.5 billion in savings in the state Medicaid budget–an initiative that is currently dominating the attention of state legislators and health care advocacy groups statewide. But Gottfried and Rivera say they are hopeful that they will be able to advance at least some of the provisions in the bill this year.

In the meantime, patients like Ryan must contend with each unexpected charge that comes their way. Ryan’s husband, Doug Moe, said he has sought to appeal the nearly $800 facility fee with the couple’s health plan, which is administered by his union, SAG-AFTRA, and has filed a complaint about it with the New York Attorney General’s Office (neither of which returned Gothamist’s requests for comment). Moe said the billing department at NewYork-Presbyterian—which is outsourced to a collections agency called Network Recovery Services—agreed to put a temporary hold on the charge.

Asked why Ryan was charged such a high facility fee and why the fee wasn’t disclosed ahead of time, NewYork-Presbyterian did not provide any concrete answers. Instead, the health system said in a statement, “While we do not comment on individual patients, we believe it is extremely important that all of our patients are provided accurate information about costs they may incur in the course of receiving care at our hospital and outpatient facilities. We encourage patients to contact us with any questions or concerns.”

But as long as she can be charged a facility fee, Ryan says she’ll just try to avoid going hospital-owned clinics in the future. “Yeah,” she said, “never again.”