Imagine it is Valentine’s day and instead of heading to town to your favorite upscale Italian restaurant you decide to stay in and create a super-romantic evening with a food delivery order of your favorite antipasti, primi piatti and secondi piatti. Next morning you check the receipt of your order and, aside from the delivery fee and taxes you find another extra line item — valet parking: $15.

Incensed, you call the restaurant, where the friendly manager explains that having good valets and paying for the premium parking spots at a nearby lot is an expense that they still have to pay for, even though you are not using it. “These are tough times,” he exclaims.

In my Telehealth Tuesday column I usually don’t veer into the political or policy waters. I’d rather be a pragmatic voice providing practical guidance on how to get the most value out of out telehealth.

Yet, occasionally a story comes across my news feed that warrants talking about. Especially when conduct like the one I’m about to describe has the potential of hurting the reputation of telehealth.

You Sound Surprised

Surprise billing in healthcare has been covered quite a bit in recent years and last year congress even passed the “No Surprises Act” to limit unexpected out-of-network charges. And it’s not a small problem: Two out of every three people filing for bankruptcy do so due to the cost associated with medical issues.

But an unexpected out-of-network bill is not what surprised the mom of a 3-year old who required a 2-hour observation by clinicians in Colorado to assess whether he needed speech therapy. No, what surprised her was a bill for a “facility fee” for her telehealth visit from the comfort of her home.

That’s like your hairdresser charging a chair fee — or your favorite restaurant tagging on a valet fee for every customer.

I’m home, you’re home; that’ll be $847 dollars
The added irony was that some of the clinicians were working from home themselves — while the hospital was charging a facility fee to, reportedly, offset its facility cost. Maybe we soon have to pay to offset the clinicians’ homeowners association fees, too?

While a charge for a facility fee is somewhat comprehensible when you are visiting a clinician in a hospital, to be charged such a fee for a telehealth visit is pretty incomprehensible.

In the “old days” before Covid-19, Medicare allowed the charge of Q3014, a billing code labeled “telehealth originating site facility fee” that nowadays is typically reimbursed at about $27 dollars, adjusted annually for inflation. The “Originating Site” in Medicare-speak, however, is the location where the patient is located — e.g., a rural clinic or affiliated medical office. Back then, Telehealth services to patients at home were not reimbursed by Medicare. Given the need for a front office person and a medical assistant to room the patient, the Q3014 helped to offset some of the associated cost.

What the mother in the story above experienced, however, was a bill for a facility fee of the physicians. But this visit for the 3-year old was obviously also not billed under Medicare, so the “originating site” principle does not apply.

Let’s talk about Facility Fees

As is easy to see, this is actually not a telehealth problem. While it is infuriating to see a facility charge applied to a telehealth visit, the whole concept of a “facility fee” even in the context of an in-person healthcare visit is, in my opinion, questionable to begin with.

Shouldn’t it be a solid business practice of service business that the fee charged for the service covers the cost of the service while providing a profit? What’s behind this “game” of hitting out-of-pocket paying patients with two bills? I suspect it’s because clinical charges are regulated and facility fees are not (yet).

Thankfully some states, like Connecticut, have put legislation in place to curb the charging of facility fees for telehealth visits but, presumably given the pressure of the healthcare lobby, those provisions are temporary, set to expire in 2023 (at least in Connecticut). And it still does not solve the problem of facility fees.

Back to Pragmatism

Okay, I can’t help but step down from the political soapbox and go back to what leaders of forward thinking organizations can do. Here are three thoughts:

  1. Stop playing Goliath. I understand that for many health systems the insurance companies with their strong negotiation power may be the real issue here, but I venture to guess that the percentage of your out-of-pocket-paying patients is pretty low — which should, financially, allow you to be more lenient, given the small volume. Yes, these patients are unlikely to fight back, but the low volume should not add much to your ultimate bottom line. And when a patient does fight back, as more and more do, the negative publicity will easily wipe out any extra profits you may have garnered from those who did not fight back.
  2. Secret Shop Your Services & Billing. To periodically review the experience of patients from their end (whether that is for making an appointment or admitting yourself to the hospital) is generally a good idea if you pride yourself to focus on great customer service. Yet I wonder if your CFO ever reviewed (and tried to comprehend) a bill for a multi-day hospital stay. I suggest you try that some time.
  3. Start investing in Price Transparency. While not as flashy as Digital Health or Artificial Intelligence, true leaders in healthcare are starting to offer patients accurate estimates of the anticipated fees. By now, it is actually the law to provide uninsured patients with a Good Faith Estimate.

At the end of the day stories like these have the potential to hurt the public perception of telehealth, which would ultimately be the worst cost of all. But then again, I’m biased…

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Christian Milaster and his team optimize Telehealth Services for health systems and physician practices. Christian is the Founder and President of Ingenium Digital Health Advisors where he and his expert consortium partner with healthcare leaders to enable the delivery of extraordinary care.

Contact Christian by phone or text at 657-464-3648, via email, or video chat.