UPMC ‘facility fee’ draws Highmark’s ire

Health insurer Highmark Inc. has been screaming about UPMC’s higher charges for cancer treatment, specifically a “facility fee” it says does nothing for the quality of care. But the higher charges don’t end there.

Take the case of a 23-year-old woman who went for a routine gynecological exam Feb. 3 at a UPMC-owned physician practice at the medical center’s Magee Womens Hospital. The woman, who asked not to be identified, has Highmark insurance.

She was billed $164 for the office visit, and, the woman says, UPMC tacked on another $294 facility fee, making her total bill $458. The visit lasted 10 minutes, she says.

Her out-of-pocket expense for the visit was $397, which includes the facility fee plus a $20 office visit co-pay. UPMC adds the facility fee because the doctor’s office is considered a hospital outpatient clinic, so services can be billed at a higher rate.

The differences between a hospital outpatient clinic and a doctor’s office may not always be immediately apparent. A government reimbursement loophole allows providers to charge two times and more for office visits and other services if they are provided in a hospital clinic rather than doctor’s office.

But that loophole may be closing.

The Medicare Payment Advisory Commission, which advises Congress on reimbursement issues, has been pressing for an end to such payment disparities. In a report released March 14, MedPAC called the billing differences a “distortion” that creates an incentive for hospital administrators to move tests such as EKGs to a hospital clinic from a doctor’s office.

Here’s an example. Between 2010 and 2012, the number of echocardiograms performed in hospital clinics rose 33 percent while dropping 10 percent at doctors’ offices, MedPAC found, suggesting the higher reimbursement prompted the shift.

Plugging the loophole would “reduce Medicare program spending, reduce beneficiary cost sharing and create an incentive to care for the patient in the most efficient setting appropriate for their condition,” MedPAC wrote.

In the woman’s case, UPMC’s facility fee was $130, or 79 percent, higher than the price of the office visit.

UPMC spokeswoman Gloria Kreps said many of UPMC’s services are hospital-based, “which allows us to establish a consistent and standardized approach to our care.” UPMC’s contracts with insurers vary by hospital and “we expect insurers to abide by the terms of those contracts.”

Aaron Billger, a spokesman for Highmark, said the insurer had been picking up facility fees, which wasn’t reflected on the woman’s bill. Starting April 1, Highmark will stop paying UPMC $188 million in higher drug fees related to where chemotherapy is administered.

“These are distorted billing practices to maximize revenue,” Billger said. “It’s happening in areas other than cancer care.”

UPMC has the highest facility fee claims in any of Highmark’s markets in three states, Billger said. Highmark has addressed the issue through negotiation with other providers, but Highmark and UPMC are not talking.

Highmark’s Allegheny Health Network does not assess facility fees, Billger said.

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