Oregon lawmakers are considering a bill to rein in the soaring costs of medical care by cracking down on a little-known line item that’s increasingly showing up on patients’ bills.
Senate Bill 539 takes aim at facility fees, which are the extra charges that hospitals and health systems tack on to a patient’s bill.
Facility fees were originally designed to help hospitals cover overhead costs associated with maintaining emergency departments and inpatient care — costs that have escalated since the pandemic because of an influx of sicker patients.
But the fees have expanded in scope as hospital systems buy up physician practices and outpatient clinics and apply a hospital-based billing structure to routine office visits and outpatient procedures.
That, supporters of the bill say, often results in higher costs for patients compared to services provided in independent practices or freestanding clinics.
SB 539 would limit the types of care such fees can be added to, and the settings where such fees can be charged. For example, it would prohibit hospitals from charging facility fees for most outpatient and routine office visits in hospital-owned clinics, as well as certain types of care delivered on a hospital campus.
The measure also aims to increase transparency by requiring hospitals to notify patients about any facility fees when scheduling appointments. It also would require hospitals to report their facility fees annually to the Oregon Health Authority, which would make them publicly available.
Health policy experts and consumer advocates say the growing prevalence of facility fees, and a lack of regulation on how much hospital systems can charge, have led to higher overall health care spending, which in turn raises insurance premiums and out-of-pocket costs for all consumers.
“Facility fees increase the cost of care, and to a large extent, insurers are absorbing the higher prices that they’re having to pay and then passing along those cost to consumers,” said Charlie Fisher, state director at Oregon State Public Interest Research Group, a nonprofit consumer advocacy group backing the bill.
Fisher said insurance companies play a role in determining how much patients have to pay for facility fees. He said those with high-deductible health plans are particularly affected, as they would have to cover the fees out of pocket until they meet their deductible.
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Health care providers in support of SB 539 say facility fees often leave patients with unaffordable bills or forcing them to delay or forgo necessary care.
Dr. Rishi Rattan, a Portland-based trauma surgeon practicing at Legacy Emanuel Hospital, testified that facility fees offer no added benefit to patients but significantly inflate medical bills.
“Patients are rarely informed about these fees in advance, leaving them blindsided when the bill arrives,” he wrote. “The lack of transparency and regulation allows hospital systems to charge facility fees at unpredictable rates, putting Oregon families at risk of medical debt.”
Dr. Van Anh Nguyen, a family medicine doctor in Beaverton who testified in support of SB 539, said patients she refers elsewhere for a diagnostic colonoscopy could pay $10,000 for the procedure at hospital-owned clinics — compared to just $900 for the same procedure at an independent practice.
Critics of SB 539 include the Hospital Association of Oregon, which argues that facility fees are a critical funding stream for all hospital-owned locations that see sicker, more complex patients than private practices and other ambulatory care settings. The hospital lobby group said that limiting the settings where such fees can be applied could lead to further consolidation.
“The Hospital Association of Oregon opposes Senate Bill 539 because it will further destabilize hospitals in Oregon and reduce access to care across our state,” Becky Hultberg, president and CEO of the hospital association, said in a statement. “At its core, this bill is not about lowering health care costs for patients. If insurers were truly concerned about affordability, we would be having collaborative conversations.”
States including Connecticut and Colorado have restricted hospital systems from charging facility fees for routine outpatient care. Oregon joins other states this year that are considering bills aimed at hospital facility fees.
On Thursday, Oregon lawmakers on the Senate Committee on Health Care will hold a public hearing on SB 539.
-- Kristine de Leon covers consumer health, retail, small business and data enterprise stories. Reach her at kdeleon@oregonian.com.
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