Significantly narrowed version of bill to ban Colorado hospital “facility fees” headed to Polis’s desk

A significantly pared-down version of a bill that would have banned some fees charged by Colorado hospitals is on its way to Gov. Jared Polis.

Hospital bills are divided into two main parts: the provider fee, for the doctor who performed the visit or procedure, and the facility fee, which covers the hospital’s overhead and support staff.

The original version of House Bill 23-1215 would have banned facility fees for care delivered virtually or in clinics that aren’t on a hospital’s campus. It also wouldn’t have allowed the fees if procedures were performed in a hospital, but could safely be done elsewhere.

The version that passed would only prohibit hospitals from directly billing patients with a facility fee for preventive outpatient care provided in a facility that doesn’t have an emergency department. They could still bill a patient’s insurance company for a facility fee under any circumstances, and charge one directly to a patient if they received care in a standard hospital, even if the care wasn’t provided in an emergency room or inpatient floor.

It does, however, require providers that charge facility fees to notify patients about the fees when they schedule appointments and when they arrive for them, and to break those fees out on their bills. Medical practices that were newly purchased by hospital systems would have to notify their patients of potential new fees, and those that aren’t in rural areas couldn’t charge a facility fee for the first 30 days after sending out notices.

The bill would also task a seven-person steering committee with studying facility fees and completing a report by October 2024. It would include when facility fees are most likely to be charged; how much revenue they generated; how the cost differs from one insurer to another; how often insurers refuse to pay the fees; if fees changed when hospitals purchased other providers; and how it all affects affordability and access to care.

The bill would cost the general fund about $536,000, for the Colorado Department of Health Care Policy and Financing.

Rep. Emily Sirota, a Denver Democrat and one of the bill’s sponsors, said she had hoped that a version with fewer amendments would pass, but that the report on facility fees will create another opportunity to take up the issue.

“We can at least address the ‘surprise’ aspect of facility fees” by requiring disclosure, she said. “The bill does set up for important discussions to come.”

The Colorado Hospital Association and large health systems came out strongly against the original version of the bill and a revision released in March, arguing they wouldn’t be able to offer outpatient care if facility fees were forbidden.

The second version would have narrowed the circumstances when facility fees weren’t allowed to telehealth visits, primary care and preventive services. It also would have exempted critical access hospitals — small, rural facilities — and “sole community hospitals,” which are either publicly owned or private nonprofits that have a contract to care for uninsured people.

Josh Ewing, vice president of government affairs for the Colorado Hospital Association, said he would have liked to have discussed the importance of facility fees before the session, but is hopeful that the narrowed bill won’t cause disruptions in care.

“Ultimately, I think we got the bill to a better place. We’re supportive of the transparency portion and the study,” he said. “At the end of the day, we’re talking about critical health care services.”

Consumer groups said the hospitals were exaggerating, and characterized facility fees as a money grab.

Adam Fox, deputy director of the Colorado Consumer Health Initiative, said the ban on facility fees for preventive care under certain circumstances will be important, since people don’t expect to pay out-of-pocket for those services. The disclosure requirements also will help some patients to choose providers with fewer fees, though not everyone has that option, since so many clinics have been purchased by hospitals.

“That’s a really important protection, but it’s only a start,” he said. “Ultimately, we need to protect consumers from unexpected bills.”