Houston Chronicle
By: Julian Gill
Large hospital bills have become more common for routine care nationwide, and they are starting to take a toll on families who need to manage chronic diseases in Houston.
For years, Kayla Yates paid a $90 copay for her son’s routine visits to Texas Children’s Hospital’s campus in The Woodlands.
Now, those same visits, which her son needs two to four times per year to manage his Type 1 diabetes, will cost her nearly $600 out of pocket after the health system imposed a new fee in late 2023.
“We’re not going to pay almost $600 per (visit),” she said.
Yates echoes the frustration that patients feel around increasingly unavoidable facility fees, which are added fees that hospital systems commonly charge to recoup overhead costs that include staff and supplies.
The fees, which are billed separately from physician’s services, emerged decades ago from changes to Medicare billing standards but have sparked nationwide controversy in recent years over their growing prevalence. More patients like Yates are paying them for common outpatient services, not just emergency rooms visits or overnight hospital stays, policy experts say.
Christine Monahan, assistant research professor at the Center on Health Insurance Reforms at Georgetown University, said a nationwide trend is driving the issue: large hospital systems acquiring smaller physician practices and expanding their presence in the outpatient market.
“Hospitals are doing that because they can generate more revenue,” Monahan said. “And that just might not be a trend we want to encourage.”
Adding to the frustration is the fact that patients may receive dramatically higher bills without warning, like some of the Texas Children’s families who spoke to the Houston Chronicle.
And the fees can range widely at the same hospital. For example, Memorial Hermann Health System charges most insurers between $139 and $464 for an outpatient service commonly associated with facility fees, according to public pricing data compiled by healthcare startup Turquoise Health. Memorial Hermann declined to comment on the data.
Insurance companies also play a role in determining how much patients have to pay for facility fees, said Monahan. The popularity of high deductible health plans has pushed more of those costs onto patients – and generated increased news coverage around facility fees, she said. Yates had to pay $492 toward her deductible on her Blue Cross Blue Shield of Texas plan, in addition to her $90 copay, her medical bills show. Insurance picked up the remaining charges, which totaled $1,248.
These patient stories have caught the eye of Texas lawmakers who are pushing for regulations that would restrict how much hospitals can charge patients who need outpatient care that doesn’t require a hospitalization.
“I think it’s a trick and should be outlawed,” state Rep. Tom Oliverson, R-Cypress, said of the billing practice. Oliverson, an anesthesiologist whose district includes parts of Harris County, recently filed a bill – HB 2075 – targeting facility fees that he says was inspired by patients at Texas Children’s Hospital.
In a statement, Texas Children’s said it is “resolute that cost should never stand in the way of our patients receiving the care they deserve.”
“Like other health care providers across the state, our billing practices follow the Center for Medicare and Medicaid Services guidelines,” the hospital said. “While we post billing information on each of our campuses and offer financial assistance to individuals in need, insurance carriers ultimately determine deductibles and out-of-pocket expenses for each patient.”
Even if insurance plans do cover a patient’s bill, those costs can still trickle down to employers and consumers through higher monthly premiums, Monahan said.
Memorial Hermann, Baylor St. Luke’s and Houston Methodist all said they charge facility fees at locations they consider hospital outpatient departments.
Baylor St. Luke’s said the fees cover support staff and equipment but did not elaborate on which facilities collect them.
Methodist said the fees are reserved for “higher acuity patient populations such as hospital clinic visits for bone marrow transplant (cell and gene therapy), organ transplant, cancer infusion therapy, and wound care treatment.”
Memorial Hermann, meanwhile, said multiple locations, including its imaging centers, specialty service clinics and physical therapy sites are all subject to facility fees. “These are considered part of the hospital, so they are subject to the same strict safety and quality standards as hospitals – ensuring they continue to provide safe, high-quality patient care,” the hospital said.
While most major Houston hospitals charge some form of facility fees, Texas Children’s dominance in the local pediatric market – and its reputation for high-quality care – illustrates how the fees can put patients in a uniquely difficult position, according to interviews with seven patient families who shared medical bills with the Chronicle.
Patients face difficult choices
For one routine visit to Texas Children’s West Campus, Jennifer Robins’ out-of-pocket costs jumped from $50 to $357 — insurance picked up the remaining $405 — after the hospital started charging facility fees. She was forced to consider leaving the endocrinologist her 10-year-old daughter had been seeing for five years.
“I have lost sleep over it,” Robins said. “I still tear up thinking about it, because I just love (our doctor).”
A Fulshear resident, Robins struggled to find another endocrinologist who was within a reasonable driving distance. Her daughter needs to see the doctor four times per year to manage her diabetes and Hashimoto’s thyroiditis.
The only physician she could find who was not affiliated with a hospital system was 35 minutes away, she said.
“I waited quite a bit to make the switch,” said Robins. “If it doesn’t work out, then I’m not opposed to going back. We’re just getting tired of paying all this extra money when they know we have to have these appointments for my daughter.”
Independent physician practices have become more scarce in recent years as hospitals expand their footprint, economists say, leaving patients with fewer affordable options.
Studies show hospital-owned facilities are more expensive for patients because hospitals can send patients two separate bills: one to pay for the doctor’s services, and the other that includes a facility fee to cover overhead costs. In smaller practices, patients typically only receive one bill for the physician’s services, which includes some of those overhead costs.
This dynamic can lead to major price swings for the same service, research shows.
Take the price of an ultrasound. One national study of 2021 data, published by the Health Care Cost Institute and funded by Arnold Ventures, found that facility fees in Texas more than tripled the price of an ultrasound from $122 to $420 – one of the largest price differences in the country that year.
In a 2024 Dallas Morning News op-ed, Dr. Rick Snyder, a Dallas cardiologist and former president of the Texas Medical Association, wrote that a common stress tests costs $410 in his office. One floor below, in an outpatient office owned by a hospital, the cost for the same test is $1600, he wrote.
“They’re not providing an increased level of service,” Snyder told the Chronicle. “This is a real problem.”
The Texas Hospital Association says it’s more expensive for a hospital to run an outpatient department, in part because of the regulatory requirements and accreditation standards. But critics question whether those standards justify charging patients hundreds of dollars for basic tests and other low-level services.
“The magnitude is where things get tricky,” said John Hargraves, director of data strategy at the Health Care Cost Institute. “These are pretty small services – the facility fee shouldn’t be a multitude of what the cost of care was.”
In the case of Texas Children’s, the fees sparked media attention because patients had already been seeing their specialist multiple times per year – many to manage chronic conditions like diabetes – on one of the suburban hospital campuses before the fees suddenly went up.
Yates said her appointments often amounted to a conversation about her son’s condition and brief lab tests. “You aren’t getting the same care as a hospital,” she said. “It’s a doctor’s office.”
Texas Children’s told KPRC that it imposed the fees in November 2023 but declined to answer the Chronicle’s questions on the timing of that decision. Financial disclosures filed last year indicate the health system felt financial pressure from insurers who limit payments for inpatient care and incentivize outpatient services. More recent financial struggles triggered mass layoffs at the hospital earlier last year.
Over the last 15 years, Texas Children’s has dramatically expanded its outpatient presence with the addition of the West Campus in Katy, a hospital campus in The Woodlands and a hospital outpatient center in Austin. It is far and away the dominant children’s health care provider in the region, accounting for more than half of all pediatric discharges in the Houston area in 2022 and two-thirds of discharges for children who suffer more severe health conditions, according to financial disclosures.
So by the time patients saw the new fees, some felt they had little choice but to pay.
Allison Hardman considered the options for her two teenage kids, but they had been seeing their specialist at the Texas Children’s West Campus for more than a decade. “I absolutely love her,” Hardman said. It wouldn’t have made sense for them to switch doctors, she said, despite the facility fee bringing the out-of-pocket costs from $90 to $272 for a single visit.
Another parent, Nicole Franchois, visited a urologist with her son on The Woodlands campus earlier this year based on a referral from her son’s pediatrician. During the appointment, the doctor suggested they get an X-ray of his stomach in another part of the building. Franchois estimated the entire visit lasted roughly 20 minutes. “I didn’t think anything of it,” she said.
Weeks later, Franchois was stunned to receive a $533 bill, which she was told reflected facility fees for both the urology visit and the X-ray.
“I will drive across the state if it means avoiding their specialist just because of how they handled it,” she said.
Attracting lawmakers’ attention
Growing patient frustration has sparked efforts to curb facility fees at the state and federal level. But the issue is contentious and complex, as hospitals and insurers blame each other for patients’ high bills.
Other states, including Connecticut and Colorado, have implemented facility fee bans on low-level outpatient services provided inside hospital-owned buildings. A Medicare advisory panel has also recommended that Congress take up reforms to more closely align hospital payments with the services provided – not where patients receive them.
Texas already passed modest restrictions on facility fee billing for COVID-19 tests, but as state lawmakers look to go further, they will likely face staunch opposition from the hospital industry.
The Texas Hospital Association argues that facility fee bans would “dismantle” outpatient care because the revenue keeps outpatient centers open.
“Discussion about not getting paid for services delivered is a non-starter for hospitals, or any business,” hospital association spokesperson Carrie Williams told the Chronicle in an email. “Hospitals have to charge for services delivered. If we don’t, we close. Access to care goes away.”
Rice University health economist Vivian Ho, who also serves as a member of the community advisory board at Blue Cross Blue Shield, pushed back on that assertion. She noted that Texas Children’s had not charged facility fees in their specialty centers for years. “I don’t see how you can say we would go under, because there was a time when they weren’t collecting the facility fees and they were still in business.”
Texas lawmakers have already filed bills to ban facility fees for telehealth, as other states have done, and require better patient notification. Now Oliverson has authored HB 2075, which seeks to ban all facility fees outside of a hospital campus or emergency room.
Texas Children’s charges facility fees in most specialty centers, including those that are not located on a hospital campus, according to its website. Oliverson, however, said he hadn’t been aware that many Texas Children’s patients have been charged the fee for routine specialty care on hospital campuses.
“We’re going to have a hearing on this bill and when we do, obviously we’ll hear from all sides, and we may need to make changes,” he said.
Most patients who spoke to the Chronicle wrestled with a fundamental question: Is a routine visit to their specialist really worth the hundreds of dollars they have been asked to pay on top of the costs to the doctor?
The largest portion of Kayla Yates’ medical bill was a $550 “room, staff and supply charge,” even though she said her visit was nothing more than a routine check-in with her child’s endocrinologist. She was charged additional fees for lab tests that day, as well as physician’s services.
After paying her out-of-pocket costs, she opted to switch to virtual appointments for her son – which didn’t come with a facility fee. But she’s worried that the quality of care will suffer.
“In my opinion, they’re walking a really blurry line about what is considered” a hospital visit, Yates said. “This is a life diagnosis for my son, this isn’t temporary … and I feel we are underserved in our community as it is.”
