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What are facility fees, and why do we have them?

You might have seen recent media coverage about facility fees, the charges included in some medical bills when patients receive care at hospitals or hospital-owned physician practices and medical clinics.

Hospitals nationwide have long charged facility fees for inpatient hospital stays and emergency department visits, as well as visits to hospital-owned physician practices and outpatient centers. Hospitals throughout Connecticut, including those that are a part of Yale New Haven Health System, charge these fees to support critical services such as trauma centers and 24/7 emergency care. Additionally, hospitals are held to much higher regulatory standards than freestanding facilities, and the difference between the costs of care reflect that higher standard.

At the same time, the state of Connecticut has chronically and severely underfunded Medicaid while imposing historic taxes on hospitals, so the need to fund our 24/7 operational capacity is under constant pressure, said Richard D’Aquila, YNHHS president.

“Yale New Haven is now the largest taxpayer in the state, and will pay more than $300 million this year alone,” he said. “Unfortunately, funds that could be used to reduce charges or enhance patient care are being redirected to state coffers.” Unlike other states, Connecticut does not have safety-net hospitals, so hospitals like Bridgeport and Yale New Haven bear enormous costs associated with patients who are uninsured or under-insured. Two-thirds of YNHHS patients are insured by government payers that compensate us well below our real costs.

Last year alone YNHHS provided more than $450 million in free care, charity care and under-reimbursed care to guarantee access for all patients the health system serves.

Facility fees have garnered more attention in recent years because the charges appear on bills for patients who do not visit the hospital, but receive care at a doctor’s office or other hospital-owned facility. With an increasing number of hospitals and health systems buying physician practices, more patients are seeing facility fees on their bills.

Why are health systems and hospitals buying physician practices? One reason is that it allows more people in different geographic areas to access expert, specialized care. It also helps YNHHS providers communicate and collaborate on patients’ care, as they move from outpatient to inpatient settings, for example. Because they are documenting in YNHHS’ Epic electronic medical record, providers can easily share important information.

Yale New Haven Health System hospitals and other healthcare providers are required by law to notify patients of facility fees before medical appointments. Recognizing that facility fees can be a hardship for some patients, YNHHS in 2017 recalibrated its pricing to mitigate the impact of these fees on patients. The health system also offers a variety of programs to help patients pay for their medical care.

“Yale New Haven Health has robust programs to help patients pay their hospital bills,” D’Aquila said. “We work with every patient on an individual basis to help them pay for their health care.”