Facility fees – designed originally to compensate hospitals for “stand-by” capacity required for emergency departments and inpatient services – are increasingly added to bills for diagnostic testing and other routine services and are raising health care costs. One state employee health plan’s claims show that facility fees charged for COVID-19 testing conducted in outpatient hospital settings ranged from $53 to $150 per test — culminating in $344,589 in additional costs over several months.
COVID-19 has upended health care systems and states are revising health insurance rules to make sure consumers can maintain their health insurance coverage and access needed health care services during the pandemic. The chart below details recent state actions that:
- Limit consumer out-of-pocket costs for testing, treatment and out-of-network care;
- Facilitate access to and delivery of care, including rapid transfers to appropriate care settings without lengthy reviews and telehealth expansion;
- Enable consumers to maintain coverage despite economic hardship and COVID-19 diagnosis by relaxing premium payment requirements and waiving penalties; and
- Ease prescription refills and allow drug substitutes (formulary exemptions).
For more information, read the NASHP blog, States Protect Consumers’ Coverage and Improve COVID-19 Care Delivery through Insurance Reforms.
Information below references federal bills developed prior to January 2019. For an updated version of this chart, click here.
The Centers for Medicare & Medicaid Services (CMS) took an important first step toward increasing the transparency of hospital finances when it required hospitals to post their charge information, effective January 2019. But, these charges are not prices paid — they are typically the starting point against which commercial payers negotiate discounts.
States with all-payer claims databases (APCDs) have an important tool that allows them to go a step further – they can analyze the differential between “charges” and “prices paid.” This is an increasingly important distinction, particularly as 90 percent of hospital marketplaces are highly concentrated. Research shows that such concentration diminishes the capacity of health plans to negotiate rates and has increased hospital costs from 20 to 40 percent without gaining improvements in efficiency or quality .
New Hampshire Comprehensive Health Care Information System’s APCD releases data that allows the comparison of the difference between what is charged by hospitals and what health plans and consumers pay. The statewide report of charges and allowed amounts for common hospital services in New Hampshire, available at the NH HealthCost website, shows how charges compare to allowed amounts. Analysis of this data, shown in the table, illustrates that the actual amount paid for a service can vary greatly from what is charged, sometimes by more than 100 percent.
|Service Category||Median Price Charged||Median Price
Allowed or Paid
|Percentage Difference between Median Price Charged and Amount Paid|
|Biopsy skin lesion||$ 189.00||$ 69.12||-173%|
|Total hip arthroplasty||$ 37,195.00||$ 20,193.17||– 84%|
|Total knee arthroplasty||$ 14,543.50||$ 5,824.55||-150%|
|Nasal endoscopy dx||$ 1,119.16||$ 437.85||-156%|
|Diagnostic colonoscopy||$ 2,553.00||$ 1,800.61||-42%|
|Fetal non-stress test||$ 369.00||$ 261.34||-41%|
|Low back disk surgery||$ 10,615.75||$ 6,559.99||-62%|
|CT head/brain w/o dye||$ 2,030.56||$ 685.86||-196%|
|Chest x-ray||$ 366.00||$ 146.95||-149%|
|X-ray exam of knee 3||$ 399.00||$ 189.53||-111%|
|MRI joint of lower extremity||$ 2,598.00||$ 1,392.21||-87%|
|Comprehensive metabolic panel||$ 86.92||$ 56.15||-55%|
|Lipid panel||$ 106.00||$ 68.44||-55%|
|Glucose blood test||$ 43.00||$ 12.44||-246%|
|Eye exam new patient||$ 264.65||$ 140.25||-89%|
|Speech/hearing therapy||$ 313.45||$ 157.70||-99%|
|Comprehensive hearing test||$ 235.00||$ 188.85||-24%|
|Cardiovascular stress test||$ 1,154.00||$ 662.88||-74%|
|Office/outpatient visit new||$ 288.50||$ 188.27||-53%|
|Emergency dept. visit||$ 2,300.00||$ 1,374.67||-67%|
Importantly, the charges and prices paid vary by procedure, hospital, and payer and the data that shows these price differences is available through APCDs. NH HealthCost and similar websites in Maine, Colorado, Massachusetts, and Washington all are valuable resources to enhance transparency by identifying the price for services and the variation of those prices within each state.
Working together, CMS and state APCDs can provide important data to fuel conversations about hospital charges and payments, and the policy issues that the data raises.
The Affordable Care Act’s amendment to section 2718(e) of the Public Health Service Act requires each hospital operating within the United States to make public a list of standard charges for items and service provided by the hospital including for diagnostic-related groups. CMS published proposed rules for FY 2015 reminding hospitals of their obligation to comply, and again for FY 2019, ultimately finalizing the rules to improve the public accessibility of charge information in a machine-readable format effective January 2019. https://s3.amazonaws.com/public-inspection.federalregister.gov/2018-16766.pdf.
Josephine Porter is director of the University of New Hampshire’s Institute for Health Policy and Price and co-chairs the All-Payer Claims Database Council (APCD Council).
Trish Riley is executive director of the National Academy for State Health Policy.
Salt Lake City, Utah: Today, Republican state legislator Norman Thurston introduced groundbreaking legislation to create a safe, state-run prescription drug importation program that would import high-cost drugs from Canada, where prescription drugs cost 30 percent less than in the United States.
The proposal for a whole-sale importation program of select, higher-cost drugs that are already licensed for sale in Canada would be among the first in the nation and promises to generate significant cost savings for the state of Utah and its consumers. The Utah bill closely follows model legislation developed by the National Academy for State Health Policy (NASHP), a nonpartisan group that works closely with state policymakers to develop state legislative and regulatory strategies to rein in pharmaceutical costs.
For more than a decade, Thurston, a respected health care advocate and member of NASHP’s Pharmacy Cost Work Group, has worked tirelessly to reduce state spending on prescription drugs. Aware of his “red” state’s concerns about regulations and the complexity of drug price transparency legislation implemented in other states, Thurston took a different approach to rein in drug costs by proposing drug importation.
“Utah will control which drugs are imported and will monitor this program so the savings make it all the way down to consumers when they fill prescriptions,” said Thurston. “The State of Utah pays for drug benefits for a quarter of its population, including state and local government employees and retirees, teachers, and Medicaid enrollees. At some point, we need to ask ourselves, ‘as a major drug purchaser, why aren’t we getting a better deal?’ Other major purchasers such as Canada and Europe get a much better deal than us.”
“The time is right for a well-run state importation program, considering the US drug market already relies heavily on pharmaceutical drug importation,” observed NASHP Executive Director Trish Riley. Currently:
- 80 percent of raw ingredients for drugs made in the United States are imported from China and other countries;
- 40 percent of finished drugs used in the United States are manufactured in other countries;
- The U.S. Food and Drug Administration (FDA) has had a cooperative agreement addressing drug regulatory matters with Canada for years, more than 30 Canadian drug manufacturers are FDA-registered to produce drugs for US markets; and
- About 20 percent of drugs licensed for the Canadian market are made in the United States.
“Consumers continue to be outraged by the price of necessary prescription drugs, and the federal government has not acted to stem the cost of drugs,” noted Riley. “States can be great laboratories for innovation and this is a great opportunity for Utah to be a national leader and develop new approaches that can be adopted by other states and ultimately by the federal government.”
Early in 2017, Thurston convened a working group of Utah stakeholders, including state agencies that pay for prescription drugs, commercial health plans, pharmacists, community clinics and others, to outline how a Utah wholesale importation should operate. The Utah work group tailored the bill closely after NASHP’s model.
The group’s recommendation culminated in the bill Thurston introduced today. Thurston developed the bill in compliance with federal regulations governing drug importation that require guarantees of drug safety and consumer savings. The legislation also requires federal approval from the Secretary of the US Department of Health and Human Services. Thurston and members of his stakeholder group indicated they are confident the federal government will approve the Utah program.
The legislation will safeguard the quality and safety of imported drugs by:
- Contracting with licensed, regulated drug wholesalers and distributors in Utah and Canada;
- Importing only drugs licensed for sale in Canada;
- Testing imported products for purity on a sample basis if needed; and
- Limiting distribution of imported drugs to only Utah.
The legislation will deliver significant consumer savings by:
- Monitoring market competition among Utah wholesalers;
- Ensuring that consumers pay similar prices to those charged in Canada; and
- Widely publicizing the prices of the imported products so consumers know what they can expect to pay.
Utah is one of several states currently considering drug importation legislation.
NASHP’s Center for State Drug Price Action: Provides technical and strategic assistance to states to reduce their prescription drug spending and regularly convenes its Pharmacy Costs Work Group to address policy and strategic issues. The work group is made up of leaders from governors’ staff, state legislatures, Medicaid programs, public employees, attorney generals’ offices, state-based insurance exchanges, comptrollers’ offices, and corrections departments. The group explores new approaches to limit pharmaceutical costs by examining the many levers state governments have as policymakers, regulators, and purchasers.
About NASHP: The National Academy for State Health Policy (NASHP) is an independent academy of state health policymakers. It is dedicated to helping states achieve excellence in health policy and practice. A non-profit and non-partisan organization, NASHP is the “United Nations of state health policy,” providing a forum for constructive work across branches and agencies of state government on critical health issues.
The fourth open enrollment period is around the corner, and both states and CMS are busy making improvements to their online marketplaces. While sites are now solid in terms of technical stability, there is room for improvement in consumer “self-service” functionality—both to improve consumer satisfaction and to reduce the need for outside assistance, such as call center help.
This webinar, featuring Claudia Page, author of a new brief from the Robert Wood Johnson Foundation, Andrew Ratner of Maryland Health Benefit Exchange and Catherine Teare of the California Health Care Foundation, included a discussion on consumer usability assessments (UX) for new enrollees and renewals.