DMH seeks to justify facility fee

Feb. 12--DECATUR -- A new fee Decatur Memorial Hospital began charging in September has rankled many of its customers.

In September, DMH started charging a $50 per visit facility fee at all DMH Express Care locations and DMH Medical Group offices.

According to DMH officials, the fee is part of its outpatient facilities' switch to provider-based billing, a national model of billing regulated by Centers for Medicaid and Medicare Services (CMS).

Fees associated with provider-based billing have been allowed by CMS since 2000. While national data on facility fees doesn't exist, the Medicare Payment Advisory Commission (MedPAC) estimated in 2012 that facility fees for office visits would add $2 billion annually to Medicare spending by 2020.

DMH President and CEO Tim Stone said the hospital changed to provider-based billing to be eligible for the 340B Federal Drug Program.

Carle Foundation Hospital in Urbana also takes advantage of the 340B program and charges facility fees. Unlike DMH, which charges $50 no matter which facility, Carle's fees can vary.

"Carle assigns a level-of-care technical fee that best reflects the intensity of services provided by staff and resources consumed during an office visit," Carle public relations coordinator Laura Mabry said in a statement.

HSHS St. Mary's Hospital in Decatur is part of the 340B program, but there are no outpatient facilities associated directly with St. Mary's. Local physician's offices operated by HSHS (Hospital Sisters Health System) aren't using the 340B program and don't charge facility fees.

"HSHS Medical Group does not participate in the 340B Federal Drug Program since we are not a hospital-based medical group," HSHS Chief Executive Officer Melinda Clark said in a statement.

Justifying the fee

Katie Anderson, vice president of Legal Affairs and Corporate Compliance for DMH, said the facility fee is consistent with how hospitals have operated for years.

"When a patient comes to the hospital, if they go to the lab or radiology, they see a physician's fee and a facility fee," Anderson said. "If someone is at our facility using our supplies and equipment, there's a charge. That's how hospitals have billed forever and ever.

"This is us extending that same billing model outside our four walls to our employed physicians and express care locations."

Nolan Miller, professor of finance at the University of Illinois, said hospitals justify facility fees with this reasoning: Since doctors affiliated with hospitals have access to the hospital's resources, the service is worth more.

"Saying the federal government is making them impose the fees sounds good, and for these locations prescribing drugs under this program to establish themselves as child entities, it makes sense that they'd define the relationship using provider-based billing," Miller said. "But that's separate from charging a fee."

Anderson, though, said CMS rules state provider-based billing has to come with a "legitimate charge."

"If you're really going to do provider-based billing for 340B, it has to be a legitimate charge," Anderson said. "We try to align our charge with what we know Medicare the other insurance companies will reimburse."

John Jaggi, an insurance broker in Decatur for 40 years, and his daughter, Anne Petry, who has been a broker for six years, said they've heard the 340B explanation before -- when Carle Foundation Hospital in Urbana went to the provider-based billing model in 2013.

"I think their excuse -- the provider-based billing for 340B -- is a cop out," Petry said. "Go back and look at the explanation when Carle started doing it a couple years ago. It's the same verbiage. They're charging an extra $50 for the same visit. They're not suddenly charging $50 less for the doctor's appointment. People are getting ripped off. It's a way to get more money from Medicaid and Medicare."

DMH insisted the 340B program was the reason it switched to provider-based billing. "We did not get into provider-based billing to generate revenue," Anderson said. "That was not our goal."

Stone said at this point DMH is reimbursed by Medicaid at 8 cents on the dollar. He said provider-based billing and the 340B program are the government's way of helping medical facilities recoup their losses on Medicaid patients.

Stone said provider status is recognition that a hospital provides a lot of vital services to the indigent for which it isn't reimbursed.

"The government allows you to recover some of those large capital investment costs in charging a facility fee," Stone said. "And the 340B program will result in money coming back to the hospital from the federal government, via the drug manufacturers.

"There are people out there who think: That's not right. I work. Why should I subsidize these people?

"Well, what are you going to do -- throw these people out on the street? If we don't get these drugs to them, then they show up inside the hospital and they're real sick, and they consume even more resources."

Who pays?

Anderson said as of Jan. 1, many who are charged the fee -- both with private insurance and Medicare -- are seeing reduced rates.

"We've worked with insurance companies to reduce the out of pocket responsibility to patients," Anderson said. "We've worked very hard to minimize the impact on patients."

Insurance coverage for the facility fee depends on the individual insurance company and plan. Some private insurance companies will negotiate a discounted fee, usually $30 or $35 instead of $50, though that may be only after the deductible is reached.

The fee is covered under Medicare, Anderson said, however: "Financial impact will vary depending on the terms of the Medicare plan an individual has."

Anderson said any patient having trouble paying a bill should call the DMH Business Office (217) 876-3785.

Marilyn Barnett, 79, of Decatur, and her husband have Medicare and supplemental insurance. But she worries about what will happen to Medicare and supplemental insurance costs.

"When you're talking about 20 patients a day at a doctor's office at an extra $50 each, that's quite a sum of money," Barnett said. "Let's say Medicare will pay it, but then what? It's hard to believe it won't eventually come back on the patient with higher rates. My husband already got a letter saying his rates are going to increase. We can't afford to keep having things raised."

DMH used to be just the hospital. Now it has offices and clinics all over Decatur and the surrounding area. Some feel DMH is making patients pay for its decision to expand.

"These places like DMH and Springfield Clinic are buying up all the smaller practices and individual doctors, then they can charge their fees and make more money," said Jim Krutsinger of Decatur. "It's one thing after another with these medical offices."

Judy Perkins, a 70-year-old Decatur resident, said her doctor's office is on the DMH campus and she still gets charged the facility fee. Anderson said which doctors charge the fee depends on their affiliation. If a doctor is with DMH Medical Group, the fee is charged.

"I don't understand it -- it's their decision to put these other facilities in the community. It was their decision to take on that load," Perkins said. "Why are they trying to pass it off on the patients?"

Anderson said in early December that no one had reported to DMH they were changing doctors because of the fee, and by late January calls to the office asking about the fee had stopped.

Both Barnett and Perkins said though they're not happy with the fee, they'll likely not switch.

"When I get a doctor broken in, I hate to change," Barnett said. But she said she'll consider it if the costs become too great.

Perkins said she can afford to pay the fee, but doesn't like the principle of an extra $50 charge for no additional service.

"It's just upsetting at my age to be thrown into this," Perkins said. "I don't know any doctors at HSHS."

Sharon Brown of Decatur said she hadn't heard about the charge, but will think twice about visiting a DMH facility again.

"I'll have to be really sick to go to the doctor -- it's going to have to be pretty serious," Brown said "But sometimes your life is worth more than money. If it came down to that, I'd go."

The original version of this story has been altered to clarify the impact on Medicare patients.

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