AUSTIN, Texas — Texas hospitals are sounding the alarm on a bill that was heard in a House committee Thursday. It would prevent outpatient clinics from collecting payment for operational expenses. Lawmakers and stakeholders say this would save Texans costs on their healthcare. But outpatient clinics are worried they won’t survive if they can’t charge for hospital services.
Outpatient clinics provide care that doesn't require an overnight hospitalization.
“A lot of it’s preventative care, a lot of it’s screening, and a lot of it's just ongoing maintenance of care services,” said Cameron Duncan, the vice president of advocacy and public policy for the Texas Hospital Association.
When Texans seek care at an outpatient clinic, they’re charged a professional fee and a facility fee. It's just like when you go to an emergency room, but outpatient clinics are typically more affordable. The first charge covers the doctor’s services, and the second is for resources used at the clinic. The so-called “facility fee” is the target of legislation that was filed by Rep. James Frank, R-Wichita Falls.
“It's just the hospital’s payment for the services,” Duncan said. “And what does it go towards? It goes towards the nurses, the equipment that's utilized for a service, everything that’s nailed down, the electricity, the front office staff, the medical billing and coding services.”
The committee substitute of Rep. Frank’s bill, which had not been posted online as of publishing, would prohibit outpatient clinics from charging fees for operational expenses related to preventive care or telemedicine. Preventive care includes things like annual exams, colonoscopies and mammograms.
“It will take money out of the hospital's pocket. That's the point. It goes but it stays in the pocket of the patient,” Rep. Frank said while defending the bill Thursday. “Sometimes we have to determine who we're going to support: Our constituents or our hospitals… I've got a lot more constituents than I do hospitals.”
Charles Miller, the senior policy advisor for Texas 2036 and a board member for Texas Employers for Affordable Healthcare, testified in favor of the legislation.
“If people haven't met their deductible yet, they would have lower out-of-pocket costs,” he said. “But it will also result in lower premiums through their employer plans. And when those plan costs are lower, the employers have more money to reinvest in their business, which includes reinvesting in salaries for the workforce.”
But Frank Beaman, the CEO of Faith Community Health System, said removing certain facility fees will be harmful to the healthcare system. He lives in Jacksboro, a small city two hours northwest of Dallas.
“If this isn’t done right, it disproportionately would hurt rural healthcare by a multiple factor,” he said.
If outpatient clinics are banned from charging certain operational fees, Beaman said many would close, leaving rural communities without care that’s often cheaper and closer than emergency rooms.
“If we lost the component of our payments that helps support the facility to support the physician to practice medicine, then we’ve just lost the whole system,” Beaman said.
Beaman argues this bill would only benefit insurance companies who want to save money, since they absorb most costs beyond a patient’s copay. While he acknowledged that some private investors who buy clinics do tack on extra fees, he said the problem doesn’t exist in the public or nonprofit arena.
And, he said facility fees are necessary to be able to run a clinic. As the CEO of a hospital system, he has to think about costs like property taxes, utilities, employee salaries, supplies, lab equipment, etc.
“Just like any business, we still have to make money,” Beaman said. “And as we've all seen… we have a labor shortage. Well, that drives the cost of labor up. We've got supply chain issues that have caused the cost of supplies to go up. Well, that has to be paid somehow. And again, I pay a premium for working in a rural area, because again, I don't have the economies of scale that they do in the big cities.”
Hospital advocates say this legislation will just put the good guys out of business.
“It’s so important to stand these clinics up in communities that really depend on them,” Duncan said. “I think that there's a perception that there's some kind of walk-into-the-door fee, and that is very much not what [a facility fee] is. It is a fee that is specifically tied to the service provided to the patient. And it's billed to either Medicare or Medicaid, or the insurance company. And of course, an insurance company — a commercial insurance company — can either pay for it or not. And there's always a negotiated rate involved there.”
The Texas Hospital Association said no other state has banned outpatient clinics from charging patients operational costs. No final action was taken on the bill.
“If this bill passes as filed or in its second iteration, pretty much every outpatient clinic that is affiliated with the hospital is at risk of closure,” Duncan said. “We don't have a number, but it's in the thousands.”