Responding to concerns identified by the state attorney general, the Connecticut Hospital Association has recommended that its members provide patients with specific information about “facility fees” they could incur if they get care at hospital-owned medical offices.

Attorney General George Jepsen praised the hospital association’s new policy Tuesday and described it as the first of its kind in the country. But he said he will continue to pursue legislation that would require hospitals to give patients information about the fees.

Facility fees are charges patients can receive if they have procedures performed at medical offices owned by a hospital or that use hospital-owned equipment — something that’s becoming increasingly common as hospitals acquire physician practices.

Many patients have said they didn’t know the medical offices they went to were owned by a hospital or that they could end up being charged thousands of dollars because of it, in addition to the doctors’ fees.

Wilton resident Susan Ferro, for example, had the same procedure done at the same radiology office two years apart. She didn’t know that in the interim, the practice had been bought by a hospital, and it cost her: While the practice billed for her first procedure as an outpatient visit, covered fully by Ferro’s insurance, it billed for her second procedure as if she’d been in a hospital. Because her health plan had a deductible for hospital care, Ferro ended up stuck with the bill — for $4,000.

Hospital officials say facility fees reflect the overhead costs of the practices and hospital, and the higher standards that hospital-owned practices meet. But some state officials, including state Healthcare Advocate Victoria Veltri, have been critical of the fees, saying they inflate the cost of health care and that patients are often in the dark about them until receiving the bill.

“Connecticut hospitals support efforts to make pricing more transparent and meaningful for consumers, and when it comes to informing patients about facility fees, hospitals agreed they can and will do better,” Jennifer Jackson, the association’s president and CEO, said in a statement. “It is important for patients to understand their care and the cost of that care prior to receiving it.”

The hospital association’s new policy, which is voluntary, recommends that hospitals make pricing more transparent by March 1.

It calls for giving written notice to patients at all off-campus, hospital-based locations to let them know they are receiving care at an outpatient department of the hospital. Patients would also receive written notice of what their potential financial liability would be, if possible.

If the type and extent of the patient’s care isn’t known, according to the policy, the patient would receive an explanation that he or she will:

• Incur a coinsurance charge to the hospital that wouldn’t be incurred at a facility that wasn’t part of the hospital;
• Receive an estimate based on the typical or average charges for visits to the facility;
• Get a statement that the patient’s actual costs will depend on the services provided;
• Receive a statement advising the person to contact his or her insurer for information on what will be covered and the patient’s financial responsibility.

Stephen A. Frayne, the hospital association’s senior vice president for health policy, said hospitals recognize that following the policy will take effort.

“But they also believe that it’s the right thing to do, and we don’t need to necessarily wait for a law to be passed to tell us to go forward and do these things,” he said.

Jepsen said in a statement that the association should “be congratulated for becoming the first in the nation to recommend such practices to its members.”

But he said legislation is needed to make the disclosure a requirement. He also wants hospitals to do more, including providing notice about facility fees before patients arrive for care and notifying more patients. And he said he wants hospitals to be more specific, when possible, about the out-of-pocket costs patients could face.

Veltri also said the hospital association’s recommendation was welcome, but like Jepsen, said it’s important for consumers to know about the fees before arriving at the facility so they can have a “full and fair choice on where they choose to get their health care.” She said she would also prefer to see transparency in how hospitals set the fees.

“In any case, consumers should check with their health plans prior to getting care on whether facility fees are covered,” Veltri said. “Not all plans cover these fees, and consumers should be able to go to a facility knowing whether they might be facing significant out of pocket costs.”

In the past, some hospital leaders have said it would be difficult to notify patients of the charges they could face because they vary based on the person’s insurance coverage and whether he or she has a deductible to fulfill.

Frayne said the association’s recommendation is consistent with what hospitals do for patients covered by Medicare, which requires facilities to tell patients what their out-of-pocket costs will be if possible, and tell them what an average charge would be if a specific estimate isn’t available.

In some cases, he said, it would be relatively easy to tell a patient his or her costs, such as if a service cost $2,000 and patient had a $5,000 deductible and had not received any other care yet that year. But if the person had already fulfilled part of the deductible, it might be harder to determine whether the patient would end up paying the full $2,000, or if the insurance plan would cover part of it.

Asked about Jepsen’s suggestion that patients should receive notice before arriving for care, Frayne said the spirit of the policy is to provide notice as early as can be, but that it’s not always possible.

In the past, some hospital officials have noted that patients already receive notices that they will get two bills for their visit to a hospital-owned office. But patient advocates say the notices don’t let patients know the extent of the charges they’ll face.

Read more:

As hospitals buy medical practices, patients face thousands of dollars in new charges

Jepsen takes aim at health care ‘facility fees’

Jepsen launches complaint form for patients charged facility fees