A bill introduced in the Senate would make it illegal for a hospital to charge its own fee on top of a physician charge.
The practice, commonly known as “split-billing” is a standard billing procedure when larger hospitals assume private medical practices.
A somewhat obscure bill introduced by Sen. Kevin Mullin, R-Rutland, would eliminate the practice in Vermont.
Mullin heard from a constituent in the Rutland area who had racked up four visits to the doctor last year. Expecting a bill for around $120 for four co-payments from his insurance, he got a bill for more than $1,000.
His doctor had apparently come under the umbrella of the Rutland Regional Medical Center, and as part of the arrangement, the hospital charged an extra fee. Under Medicare rules, hospitals are allowed to charge a fee for the technical component of a medical service, while a physician receives a separate fee. The reasoning is that hospitals incur costs by assuming practices and have to invest in overhead. Hence, federal rules allow an additional level of reimbursement for the hospital.
More physicians are moving under the umbrella of hospitals, according to the Vermont Department of Banking, Insurance, Securities and Health Care Administration. Hospitals bill all patients in the same fashion, although insurance companies negotiate for different rates. The end result is more split billing.
Mullin says the billing method contributes to the overall rise in health care costs. And from a consumer standpoint, it means patients will pay more for the same service.
“That just doesn’t sit well with me,” Mullin said.
He said his bill is a patient protection and cost containment measure.
According to the Vermont Association of Hospitals and Health Systems, the extra fee for the hospitals allows them to cover the increased overhead necessary to pull in more physicians and offer those services.
Michael Del Trecco, vice president of finance for the association, said the majority of the time hospitals acquire practices because they cannot afford to continue independently. The hospitals then have to keep doctors in the community and provide access to care. This extra overhead cost is what rationalizes hospitals charging a separate fee.
Del Trecco said the place the fix nuances like this one is in the context of the larger picture of payment reform and moving away from fee-for-service payments rather than in a piecemeal fashion.
Aside from the costs to patients, some independent physicians are critical of the practice also.
Dr. Christian Thomas, an oncologist in Colchester, said split billing essentially allows hospitals to charge twice as much as independent physicians for the same service. This, he said, creates an uneven playing field.
Thomas is the chair of the group Healthfirst, Inc., which strives to promote successful independent health care practices.
“The real issue is that there’s so many incentives that favor the big institutions,” he said.
Thomas attests that if the payment structure was more even, smaller practices would not shifting to larger hospitals in such droves. He says allowing hospitals to charge more for similar services also does nothing to contain costs. In fact, Thomas said, the extra billing adds to the large administrative apparatus of big hospitals and begins to do away with the best cost-cutters: efficient, small private practices.
For now, Mullin’s bill is on the shelf in the Senate Committee on Health and Welfare.
