When your doctor’s visit comes with a hospital fee — but no hospital

Plus: Toppman reviews Children’s Theatre's 'School of Rock'; Chetty offers economic mobility advice; CMPD officer shot; Staffers depart Robinson's campaign; Atrium buys 40 acres in Atlanta

Good morning! Today is Monday, September 23, 2024. You’re reading The Charlotte Ledger, an e-newsletter with local business-y news and insights for Charlotte, N.C.

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Today's Charlotte Ledger is sponsored by Fox Rothschild, a national law firm whose Charlotte-based attorneys provide litigation, real estate, labor and employment, corporate and a wide range of other services to clients in the Carolinas and across the country.

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LEDGER IN-DEPTH

As hospitals buy up medical offices and specialty clinics, hospital facility fees for routine doctor’s visits catch patients off guard; ‘I felt like what they did was really dirty’

Rebecca Smith had been accustomed to paying $75 for an office visit at Lake Norman Oncology in Mooresville, where she went for regular check-ups. But the charge increased to $400 after Novant Health bought the practice, which Smith says feels like “a bait-and-switch.” More patients in North Carolina are getting hit with hospital “facility fees” — even if their care isn’t in a hospital.

By Michelle Crouch
Co-published with N.C. Health News 

Rebecca Smith, a breast cancer survivor, didn’t think much about it in 2018 when Novant Health bought Lake Norman Oncology, the practice in Mooresville where she had regular checkups with her cancer doctor. 

Then Smith, 51, received a bill that left her stunned. 

Instead of the $75 fee she had been paying for an office visit and blood draw since she started treatments in 2017, Novant hit her with a bill for about $400 for the visit. 

Smith was sure it was a mistake. But she soon learned the extra charge was what is known as a “hospital facility fee,” an expense a hospital can add to your bill when you visit one of its doctor’s offices or clinics.

“It was like a bait-and-switch,” Smith said. “I’m going to the same office. I’m seeing the same doctor. I’m having the same follow-up appointment I always have — and then, all of a sudden, they changed the billing. I felt like what they did was really dirty.”

As big hospitals snap up physician groups and specialty clinics, more patients in North Carolina and across the country are getting hit with these types of surprise hospital facility fees, according to experts and federal reports. 

Hospital facility fees traditionally were added to hospital bills to help cover the higher overhead costs of operating a 24/7 hospital with expensive emergency rooms, intensive care units, round-the-clock maternity units and the like.

But increasingly, health care systems are rebranding other types of medical buildings they own as “hospital outpatient facilities,” allowing them to tack on those same hospital fees for patient visits that are miles away from a hospital campus, said Patricia Kelmar, senior director for health care campaigns at the nonprofit U.S. Public Interest Research Group.

The fees, which can vary from $15 to several thousand dollars, are added to a wide range of services, from lab work and routine office visits to invasive procedures such as colonoscopies. 

“These fees are being charged to people for things that have nothing to do with hospital care,” Kelmar said. “Insurance companies are rightly saying, ‘We’re not paying this, because it’s not hospital care’ — so patients get stuck with the bill.”  

Hospital officials, for their part, say they need to charge those extra fees to help cover the costs of care and point to insurers that don’t pay the entire cost of a visit.

Facility fees can add thousands to medical bills

Patient advocates say facility fees push up health care costs for everyone, contributing to soaring insurance premiums and increasing the burden on those already struggling to pay their medical bills.

One study that examined how facility fees affect health care costs found that the average ultrasound bill in North Carolina jumped when it included a facility fee, from $191 to $460. The study found that the cost of a physician office visit surged 43%. 

Facility fees are even higher for more costly procedures. For example, in 2023, the average hospital facility fee for a simple colonoscopy (with no biopsy or polyp removal) was $1,530, according to a Johns Hopkins University study — on top of the procedure’s actual cost. 

The Charlotte Ledger previously reported on a Charlotte area patient who was hit with a $5,300 facility fee for a colonoscopy at an Atrium Health outpatient center, pushing the total cost of his procedure to more than $10,000.

Hospitals say facility fees are crucial to cover the extra costs that come with the high level of care they must provide, with 24-hour medical and nursing staff and treating anyone who walks in regardless of their ability to pay. 

Eliminating the fees “would reduce funding that is essential for care-team staff and resources utilized to care for patients beyond the primary provider,” the North Carolina Healthcare Association said in an emailed statement. 

The association cited research that shows patients who receive care in a hospital outpatient facility are more likely to come from underserved communities, tend to be sicker, and need more complicated care. 

It also blamed insurers for not paying the fees: “These facility fees do not substantially impact cost of care for beneficiaries unless the insurer decides to pass that fee onto the patient.”

How consolidation drives facility fees

Over the past decade, hospitals have been on a buying spree, snapping up clinics, imaging centers and physician groups. In 2012, only 25% of physicians worked for hospitals or other corporate entities, but by 2023 that number had skyrocketed to almost 77.6%, research shows.

The consolidation means patients increasingly have no choice but to get their care in hospital-owned facilities — and to pay the associated facility fees. 

Ali Moghtaderi, a health policy expert at George Washington University who has researched facility fees, said a change in federal reimbursement rates in 2007 or 2008 helped drive consolidation. A health care provider gets 2.5 times more for a service that takes place in a hospital outpatient clinic compared with a service delivered in a physician’s office, he said. 

“If you’re being paid $100 for a service and you just need to change the location to get paid $250, you find a way to make the change,” he said. “The legal way for a hospital to do that is to buy the practice and pay the physician.”  

Moghtaderi analyzed federal Medicaid/Medicare data from 1999 to 2019 to calculate how hospital consolidation has affected heart care services in each state. His analysis found that 85% of cardiologists in North Carolina work for hospital systems, up from 24% in 1999 and 55% in 2009. 

At the request of The Ledger/NC Health News, Moghtaderi did a similar analysis of the oncology market. It showed that roughly 92% of oncology doctors in North Carolina (and 80% of those in the Charlotte region) work for a hospital system, up from 33% in 1999 and 55% a decade ago.

The shift in the market has led to more North Carolina cancer patients getting hit with facility fees, according to the Health Care Cost Institute, a nonprofit that analyzes data from health insurers. 

In an analysis conducted for The Ledger/NC Health News, the institute found that about 71% of bills for chemotherapy visits in North Carolina include facility fees, up from 45% of bills in 2014. 

Hospital ultimatum: Join us or else

David Eagle, an oncologist who saw patients at Lake Norman Oncology from 2002 to 2021, told The Ledger/NC Health News the pressure to sell the practice increased in the 2010s when Charlotte’s large hospital systems started buying local physician offices. He said those offices were the source of most of his referrals. 

“There’s pressure that if you don’t join, you’re going to be competing directly against the hospitals,” Eagle told The Ledger/NC Health News. 

In May 2024 remarks to Congress, Eagle explained it this way: 

These rapidly consolidating large health systems were increasingly employing internal medicine and related physicians who referred patients to us. As such, these health systems effectively controlled our patient base, with the power to direct patients away from our practice. 

In 2017, one large health system in our region gave us an ultimatum — be acquired by us or we will hire physicians to compete against you.

The practice sold to Novant in 2018, which switched its billing to start charging facility fees in 2020. After the change, Eagle said he lost many patients who told him they could no longer afford their treatments. 

“Patients I had followed and treated for years simply left,” he said. 

That was part of the reason Eagle left the practice in 2021 and took a job doing legislative affairs and patient advocacy for New York Cancer & Blood Specialists, he said. 

In that job, he has been advocating for Congress to consider so-called “site-neutral payment policies” that ensure the cost of a medical service is the same regardless of where it’s performed.

Fees pop up at clinics already owned by hospitals

Several patients told The Ledger/NC Health News that hospitals have added facility fees even at clinics that haven’t changed hands. 

Doug Eubanks, 47, who lives in Wendell outside Raleigh, said he used to pay only a $50 copay for his visits to UNC Health specialists to manage several chronic health conditions. 

However, about a year and a half ago, Eubanks began receiving additional bills for each visit, ranging from $175 to $250. Like Smith, he initially thought the bills were a mistake but soon learned UNC Health had started coding his appointments as “hospital outpatient visits” and was adding a facility fee. 

“It seems like they’re just milking their patients,” Eubanks said.

Eubanks tried filing a complaint with the N.C. Department of Insurance, but he said the agency told him it was a hospital billing issue, not an insurance issue. 

He said the extra costs have already affected his health care, prompting him to reduce the number of times he visits his endocrinologist to manage his diabetes to twice a year instead of four times a year.

A spokesman for UNC Health said in an emailed statement that facility fees “help cover the care and services provided” and that the fees are not new. 

“Recent attention on these charges appears to be the result of commercial insurance policy and claims handling,” the statement said. “Commercial insurance does cover these charges, but they are often subject to the patients’ outpatient deductible or co-insurance based on their plan selection. 

“Many patients who are participants in commercial insurance plans experience a higher out-of-pocket cost due to the health plan they have selected and the reimbursement rules of that commercial insurer.” 

That paperwork you sign when you check in? It matters.

Even if you know to expect a facility fee, it’s almost impossible to know up front what you might owe. But when you sign the paperwork at your health care provider’s check-in desk, chances are you’re agreeing to pay anyway.

In some cases, the paperwork lists the possible cost of a visit, but the range can be remarkably broad. For example, Eubanks said the contract he had to sign before seeing his UNC Health endocrinologist listed potential charges ranging from $29 to $13,120.

“If you took your car to a mechanic, and they said it could be free or it could be $13,000, nobody would agree to do that service,” Eubanks said. “It’s insanity.” 

In court cases challenging facility fees, those contracts have protected hospitals. For example, in a Mecklenburg County case decided by the N.C. Court of Appeals in July 2024, patient Micandria Darroux protested a surprise emergency room facility fee of more than $2,000, arguing in her complaint that she wasn’t told about the fee in advance. 

However, the court determined the fee was justified because she signed a contract promising to pay for “all medical services,” and “any amount [not] covered by her insurance.”

Facility fee ban stalls in N.C. House 

At least 15 states have taken action to address facility fees, according to the National Academy for State Health Policy. Some states now require patients to be specifically notified about the fees. Others ban the fees for care in nonhospital locations. 

Maureen Hensley-Quinn, senior director of coverage, cost and value for the academy, said states began targeting facility fees in 2019 as part of an effort to rein in soaring health care costs. Most of the efforts have been bipartisan, she said. 

“State officials have gotten more involved because consumers are complaining,” she said. “They didn’t go to a hospital, so they don’t understand why a hospital fee was added to the bill.” 

In 2023, the N.C. Senate approved legislation as part of the “Medical Debt De-weaponization Act” that would have banned facility fees unless you received care on a hospital campus, at a remote hospital location or at a facility with an emergency department. 

The legislation also said that regardless of location, providers could not bill facility fees for certain types of care that could be provided safely and effectively in a non-hospital setting.

The legislation was never voted on in the House. 

Sen. Jim Burgin (R-Angier), one of the bill’s co-sponsors, said he has heard increasing complaints about facility fees from frustrated patients and physicians. 

“All of these hospitals that have gone out and bought all these doctors’ offices and then immediately raised the prices 30% to 40% because they can add a facility fee — to me, that’s wrong,” he said. “That’s why we’re running health care costs up through the roof.” 

Burgin said he also unsuccessfully pushed for a facility fee ban in the 2024 short session, and he plans to try again in 2025. 

He said the North Carolina Healthcare Association, which advocates for the state’s hospitals, strongly opposed the measure. 

“I got a lot of pushback,” he said. “The hospitals don’t want it, because it’s going to cost them money.” 

Do hospital-owned clinics offer better care?

When The Ledger/NC Health News asked Novant why hospital facility fees were added to bills for patients at Lake Norman Oncology, a spokeswoman emailed a statement that said Novant brings “leading edge and expert care” to the community and that hospital outpatient departments “are held to the same rigorous regulatory standards as our hospitals.” 

Novant then cited a study that found non-hospital-affiliated oncology clinics are more likely to prescribe “low value,” or less effective, cancer treatments. 

“In contrast, our multidisciplinary cancer teams prioritize disease specialization and emerging treatments through clinical research,” the hospital said. 

Other studies show patients receiving chemotherapy from independent practices tend to do just as well or better than those who get the same treatment at hospital-owned clinics — and they pay a lot less. 

Also in its statement, Novant suggested that insurers bear some responsibility for the problem: “Since out-of-pocket cost is determined by a patient’s individual health insurance plan, we encourage patients to work directly with their insurer to understand their total cost of care, regardless of location type.” 

‘This is not right. I refuse to pay.’

Smith, a self-employed accountant and single mother, said she was already paying more than $1,200 a month for health insurance for her and her daughter when she got the bill with the facility fee, and she didn’t have an extra $400. 

Smith said she tried to appeal the charges, arguing that she was not informed in advance that the clinic’s billing practices were changing. She also argued that her Novant account clearly listed the encounter as an “office visit.” 

In response, Novant kept pointing to a contract she signed in which she promised to cover anything her insurance company didn’t pay. 

“They would not change their stance. I would not change mine,” Smith said. “At the end of the day, I left the practice.” 

She said she never paid the bill and still gets calls from debt collectors about it. 

“I have the money now to pay it, but it is the principle,” she said. “Each time someone from collections calls me, I tell them the same thing: ‘This is not right. I refuse to pay.’”

Michelle Crouch covers health care. Reach her at mcrouch@northcarolinahealthnews.org. This article is part of a partnership between The Ledger and North Carolina Health News to produce original health care reporting focused on the Charlotte area.

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Today’s supporting sponsor is Landon A. Dunn, attorney-at-law in Matthews:

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Chetty shares how to keep economic mobility rising: Focusing on childhood development, increasing connections

Speaking to a room filled with dozens of Charlotte leaders, economist Raj Chetty said Friday that the city should continue its efforts to improve economic mobility by investing in childhood development and encouraging connections between different groups of people.

“Kids have the best chances of rising up if they’re growing up in communities where low-income folks are more connected to high-income folks,” he said. “That’s true both nationally, and it’s true locally here in Charlotte.”

Chetty, a Harvard economist, is well-known in Charlotte because his 2014 study of economic mobility ranked Charlotte last — 50th out of 50 cities — in the share of children from low-income families who grew up to become high-income earners. The low ranking mobilized local business and philanthropic leaders to study the issue and commit resources to it.

A study Chetty released this year using newer data showed Charlotte moving up to 38th out of 50. It was based on children born in 1992, which means that any improvements can be mostly attributed to changes in the 1990s and 2000s.

Chetty said that the data seems to show that cities fell or rose in the rankings because of changes in parental employment: Communities creating jobs tended to offer more economic mobility, while those losing jobs tended to have less economic opportunity.

He spoke Friday to a couple of hundred leaders in business, nonprofits, government and foundations at the Mint Museum uptown. The event was sponsored by Leading on Opportunity, an arm of Foundation for the Carolinas that focuses on economic mobility, and was sponsored by Bank of America and Novant Health.

Toward the end of his remarks, Chetty said he has written an upcoming column for the New York Times about how to create a society that encourages economic opportunity, and that the final paragraph of the column praises Charlotte’s efforts. The room applauded. —Tony Mecia

Related Ledger articles:

• “Taking the temperate on upward mobility” (June 9, 2023, 🎧 also a podcast)

• “Is Charlotte really 50th out of 50 in economic mobility?” (🔒, March 2, 2022)

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🎭 Theater review: ‘School of Rock’ rings in optimism as a new generation takes the mic

Ledger arts critic Lawrence Toppman took in Friday night’s performance of the Andrew Lloyd Webber musical “School of Rock” by the Children’s Theatre of Charlotte, which runs through Oct. 20 at ImaginOn. 

In his review for The Ledger, Toppman writes: 

My favorite moment in “School of Rock” at Children’s Theatre of Charlotte came during the title song, as formerly staid students from Horace Green School blew the audience away in a battle of the bands. While young musicians soloed in the foreground, the adult backing band for the other numbers sat on an elevated platform at the back, beaming from ear to ear with their hands in their laps.

Those smiles said three things. “That’s right, people: The kids are really making this music, not us and not a recorded soundtrack.” And “A torch is being passed to the next generation, and it burns brightly.” And, perhaps, “That was me XXX years ago, and I’m proof you don’t have to give up what inspires you.”

That’s the main point of this show, which might’ve gotten more attention had every musical of the 2015-16 Broadway season not been steamrollered by “Hamilton.” 

Check out Toppman’s full review, with information if you want to go: 

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You might be interested in these Charlotte events

Events submitted by readers to The Ledger’s events board:

• WEDNESDAY: “#YPMixerCLT,” 6-8 p.m., Lenny Boy Brewing, 3000 S. Tryon St. Come and meet and see Charlotte’s leading arts and creative nonprofits: Art, Music, Dance, Theatre, DJs, Live Music, Opera, Ballet, Comedy, Slam Poetry and more! Come learn about these amazing organizations and how you can get involved. $30 (includes light bites and 2 drink tickets).

• THURSDAY: “Sustainability As a Business Development Strategy,” 5-7:45 p.m. at 300 S. Brevard St. in Charlotte. Join the Eastern European Business Network for an enlightening event on “Sustainability As a Business Development Strategy,” hosted in collaboration with the Wells Fargo Foundation. This event aims to educate our members on the critical importance of integrating sustainability into their business development plans in America. Additionally, we will provide a comprehensive overview of sustainability concepts and practices.

• THURSDAY: “Sustain Charlotte Social: Build a better bus system,” 5:30-7:30 p.m., Revolution Park Sports Academy, 1225 Remount Road, Charlotte. Join Sustain Charlotte to talk about all things transit! Speakers will share more details about a possible transportation tax and ongoing bus initiatives at CATS, followed by an interactive workshop about how to improve specific bus stops and bus routes in West Boulevard neighborhoods. Come share your thoughts and affect how our bus system serves YOU! Free.

➡️ List your event on the Ledger events board.

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In brief:

• Officer shot during traffic stop: A Charlotte-Mecklenburg Police officer and a suspect exchanged gunfire during a traffic stop Sunday night in southwest Charlotte, and both went to the hospital with serious injuries. The incident took place near the corner of Nations Ford and Arrowood roads at about 7:30 p.m. (WBTV)

• Key staffers depart Robinson campaign: Four senior staff members of Mark Robinson’s campaign for governor have departed the campaign, following a report by CNN last week linking Robinson to inflammatory posts on a porn site message board. Officials who have left include the campaign manager, deputy campaign manager and finance director. WUNC reported that Robinson, a Republican running against Democrat Josh Stein, has just three staff members remaining with his campaign. (WUNC)

• Atrium buys 40 acres in Atlanta: Atrium Health spent $70M to buy a 40-acre site in southwest Atlanta. The healthcare system owns hospitals in Macon and Rome, Ga., and has partnered to open a clinic in the Atlanta area. The company declined to say what it is planning for the site. (Biz Journal, subscriber-only)

• Voucher, immigration bill vetoed: Gov. Roy Cooper vetoed a bill that would expand private-school vouchers and compel sheriffs to cooperate with federal immigration officials. Republicans are expected to have enough votes to override the veto. (WRAL)

• CLT ranked below average: A new J.D. Power survey ranks Charlotte’s airport below average for customer satisfaction among major airports, largely because of increased congestion springing from more passengers. (Axios Charlotte)

• Offer to buy Charlotte Observer: Charlotte Agenda founder Ted Williams said he’s serious about wanting to buy The Charlotte Observer for $5M, an offer he made publicly in his new financial newsletter. Williams’ offer was even reported by The Wall Street Journal. Williams told The Ledger on Friday that he hasn’t received a reply from the Observer’s parent company.

• Corn maze time: Corn mazes have started opening in the Charlotte area. Axios Charlotte has a list.

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Executive editor: Tony Mecia; Managing editor: Cristina Bolling; Staff writer: Lindsey Banks; Business manager: Brie Chrisman