Health-care charges fly below the radar

Learn more about:

Patients, insurers hit with additional fees by some providers

Consumers who visit medical clinics that are affiliated with hospitals may soon find a rather unpleasant surprise: an extra bill.
As employers in southeastern Wisconsin face another year of double-digit increases in the costs of providing health care coverage, some hospital groups are using a federal loophole designed to increase Medicare reimbursements to pull in more revenue from the clinics they own.
A federal rule that was updated during the Clinton administration and took effect in October 2002 was designed to allow hospital-owned clinics that act as an intrinsic part of their parent organizations to charge Medicare patients a hospital facilities charge for each office visit.
Most of that charge is paid for by the Medicare administration. However, according to the regulation, those with private-payer insurance must also pay the facilities fee, which can have the effect of increasing the out-of-pocket cost of a physician office visit.
Because the facilities fee — typically in the area of $125 — comes from the hospital, it can apply toward a patient’s hospitalization deductible rather than being covered by an office visit co-pay, lab work or customary co-pays for other medical services.
While, according to federal regulations, Medicare patients must be informed prior to receiving services at provider-based clinics, no such regulation exists for private payer patients.
The impact of facilities fees on those with private-payer insurance was felt late last year, after All Saints Health Care, a branch of Wheaton Franciscan Services serving Racine County, reclassified all of its clinics as outpatient hospital departments.
All Saints operates St. Mary’s Hospital, St. Luke’s Hospital and eight clinics.
Nearly 100 clinics throughout southeastern Wisconsin have begun charging facilities fees, according to the Wisconsin Department of Health & Social Services.
The changes have left individual patients in the lurch, staring at unexpected bills.
"We have seen it be a problem mostly in Racine due to All Saints," said Martha Connelly, a partner with Frett-Barrington Ltd., a Waukesha-based benefits consultancy. "The problem is when you visit a primary care physician and then get billed for what looks like a hospital room charge."
Neither the Department of Health & Social Services or the Wisconsin Office of the Commissioner of Insurance (OCI) are in a position to regulate the fees.
"It is not something that we regulate," OCI assistant deputy commissioner Eileen Mallow said. "Most of the time, if someone wants to know ahead of time what it is going to be, the insurers ask that the person call them with the provider’s specific billing code so the person can tell them what the co-pay is. But there is no incentive for the provider to be up-front and tell a private-payer patient about the fee."
All major hospital entities serving southeastern Wisconsin currently have some hospital-based clinics.
The predominant health care provider, Aurora Health Care, has the most hospital-based clinics in the market.
According to Aurora spokesman Jeff Squire, the chain charges the facilities fee "only if the clinic meets the requirements to be hospital-based. We have no intention of reclassifying of reclassifying any more of our clinics as hospital-based clinics."
Once a clinic is classified as hospital-based for the purposes of Medicare, it must bill the facilities fee of everyone, including patients with private-payer insurance, he said.
"If you have a clinic that is classified as a hospital-based clinic, then that clinic must bill as a hospital-based clinic, which is a different set of billing than a physician-services clinic," Squire said. "The way we are billing is both legal and appropriate."
Covenant Health Care charges the facilities fees at off-site clinics that actually provide hospital services, according to St. Joseph’s Regional Medical Center chief operating officer Rick Hart.
"Our Mayfair Outpatient Clinic, for instance, has been hospital-based for more than a decade," Hart said. "It is not a doctor’s office. A doctor may refer you to that service. A doctor might perform a procedure there."
Services provided at Covenant’s other off-campus locations include ophthalmology procedures, cancer treatment and colonoscopies.
"All of these sites have evolved out of a preference for location having to do with convenience for patients and as a result of space issues that might exist on the campus," Hart said.
Hart stated that it was not likely Covenant would consider reclassifying physician clinics as provider-based facilities, so the system could be able to charge the facilities fee.
"We have done no reclassifications," Hart said. "I am not aware of any consideration of reclassifying clinics."
However, additional clinics in the market may have recently been approved as being hospital-based by the Centers for Medicare and Medicaid Services, according to officials at the Department of Health and Social Services. Months can pass before the department is notified of a provider-based determination for a clinic or group of clinics.

Jan. 10, 2003 Small Business Times, Milwaukee

Sign up for the BizTimes email newsletter

Stay up-to-date on the people, companies and issues that impact business in Milwaukee and Southeast Wisconsin

What's New


Sponsored Content

Stay up-to-date with our free email newsletter

Keep up with the issues, companies and people that matter most to business in the Milwaukee metro area.

By subscribing you agree to our privacy policy.

No, thank you.
BizTimes Milwaukee