Cleveland Clinic patient says $30 co-pay turned into a $3,000 bill

Julie Beinhardt said she was blindsided by $3,000 in facility fees following a series of visits to a Cleveland Clinic chiropractor last year. Federal regulators are taking a closer look at such fees to determine whether taxpayers and consumers are being treated fairly. (Fotolia)

(Fotolia)

CLEVELAND, Ohio -- Before seeking care for a foot injury last year, Julie Beinhardt tried to do her financial homework up front.

She said she contacted the Cleveland Clinic and her insurance company and was told her visits to a Clinic chiropractor in Willoughby Hills would be covered. She would only owe a $30 co-pay.

But the bills that soon began arriving at her home in Kirtland told a different story: She was being charged more than $3,000 by the Clinic for "hospital services" related to her care. And her insurance company, Medical Mutual, was refusing to pay.

"I wasn't told about these charges until I started receiving bills," said Beinhardt, 40, who works as a nurse for MetroHealth. "Some of them were $700 each. It seemed outrageous."

Beinhardt's story is far from unique. She became trapped in a much broader battle over a practice known as provider-based billing, where health systems essentially bill patients twice: once for the work of the physician, and a second time for the use of the hospital's equipment and facilities.

The practice often results in higher overall bills that become the responsibility of patients, either because an insurer refuses to pay or because the patient has a high-deductible plan.

The Clinic declined to publicly discuss the details of Beinhardt's complaint, citing patient confidentiality rules. But spokeswoman Heather Phillips said the hospital system routinely notifies patients of provider-based charges. She said Medicare beneficiaries are notified every time they get care (a federal requirement), and privately insured patients are told once a year.

"Provider based billing (or facility fees) covers the cost of providing services patients receive," Phillips said in a statement. "Medicare allows hospitals with outpatient facilities (such as a doctor's office) to bill this separate facility fee to cover the overhead costs of maintaining these facilities."

Indeed, the practice has become standard nationwide and in Cleveland, where University Hospitals and MetroHealth also employ the same system. But federal regulators, concerned about rising costs and consumer complaints, are taking a harder look at the impacts of provider-based billing and asking whether taxpayers and patients are being treated fairly.

For example, the inspector general for the federal Health and Human Services Department is reviewing whether government regulators are adequately enforcing rules that require Medicare beneficiaries to be notified of hospital service charges before they get care. The agency is also reviewing price disparities in which the same service costs more in a hospital-owned clinic than it does in an independent physician's office.

In addition, President Obama signed a law late last year that will block hospitals from using provider-based billing at off-campus outpatient facilities they acquire in the future, a measure that could help rein in costs and remove one incentive for the rapid expansion of large health systems.

However, the new law does not apply to existing outpatient centers that use provider-based billing, and its impact will not be fully known until its underlying regulations are written in coming months.

Meanwhile, patients will be left to navigate the system - and pursue billing disputes -- on their own.

Beinhardt said she spent several weeks contesting the charges during conference calls with representatives from Medical Mutual and the Clinic.

"I spent at least 10 hours on the phone dealing with it," Beinhardt said. "The conference calls were 45 minutes to an hour. They were long discussions back and forth. And then you would have to call back and be put on hold with people. It took an extreme amount of time."

Beinhardt said Medical Mutual continually balked at paying most of the charges, citing problems with the way they were listed on the Clinic's bills. For example, she said, some bills contained only charges for facility fees without any corresponding charges from her chiropractor.

After she pressed her case with Clinic supervisors, Beinhardt said, the health system eventually agreed to waive the fees. But instead of relief, she said, the battle left her with a feeling closer to resignation.

"I just felt like a small part of this huge machine that just cares about its bottom line," Beinhardt said.

Phillips, the Clinic spokeswoman, said the hospital appreciates Beinhardt for bringing the matter to its attention and that it will continue to work with her. "It is our goal to provide each patient with optimal service," Phillips said.