New Minnesota law seeks transparency in medical billing

New Minnesota law seeks to reduce the surprise in health care bills, but a reformer says it’s more of a small step than a giant leap.

Essentia Health-St. Mary's Medical Center in Duluth is seen in this file photo. Essentia clinics in Minnesota already have the facility fee disclosure posted, new state law effective Aug. 1, said David Pilot, vice president of finance for the Duluth-based finance system. Forum News Service file photo

DULUTH — A new law going into effect this summer is an attempt to remove some of the surprise factor from medical bills in Minnesota.

But a longtime consumer advocate in Duluth believes it will have a minimal effect on the overall problem of high health care costs.

“The idea that price transparency can really empower consumers … and promote competition is a pipe dream,” said Buddy Robinson, director of the Minnesota Citizens Federation Northeast.

Authored by state Sen. Rich Draheim, R-Madison Lake, the financial fee disclosure passed unanimously in both the House and Senate and was signed into law by Gov. Tim Walz.

When it takes effect on Aug. 1, it will require clinics that are part of a larger hospital or health system — the vast majority of clinics in Duluth and in Minnesota — to post a notice on their premises and websites that the patient may receive a separate charge for the facility, and that it could mean higher out-of-pocket costs.


In a telephone interview, Draheim said he doesn’t object to facility fees but does object to them being hidden from consumers.

“I think it’s time that we take back the health care information,” Draheim said.

Surprises seem to be a growing part of medical bill sticker shock for patients.

In a report released last week, a California company called GetInsured said that nearly 60% of Minnesotans in its survey reported they either had received a medical bill that was a surprise or was difficult to pay off, or both.

Even the governor is not immune to surprises in his medical bills as he discovered in the wake of an operation earlier this year.

“I was recently surprised to discover one of these fees myself after I was transferred from one facility to another for my knee surgery,” Walz said in a statement provided by his office regarding the facility fee bill. “This law is part of a broader effort to provide more transparency for Minnesotans about the cost of their health care.”

Draheim said price transparency has been a key issue for him. He authored a “right-to-shop” bill that didn’t get through the Legislature this session, and a bill that passed in the 2018 session requiring clinics to disclose the prices of 25 of their most common procedures. The latter took effect on July 1.

Essentia clinics in Minnesota already have the facility fee disclosure posted, said David Pilot, vice president of finance for the Duluth-based finance system. It included that along with the 25-procedures list when it was posted at clinics.


But like Robinson, Pilot said he thinks the real impact of such laws is underwhelming.

“I don’t think it provides great information for the patient,” Pilot said. “It still doesn’t tell them what they’re going to have to pay. … It all depends on the patient’s particular insurance plan, whether they met their deductible, whether they have a copay and so forth.”

Facility fees — sometimes referred to as provider-based billing — actually are required by the government for Medicare and Medicaid patients at hospital-based clinics, he said. The clinics are required to send out two bills per office visit to the agencies, one listing a facility fee and the other a professional fee that’s lower than it would be if the clinic were independent. Nonetheless, the combined bills at a hospital-based clinic might result in a higher total cost for the consumer, Pilot said.

There's a reason for the higher overall price, said Mike Laughlin, director of managed care finance for St. Luke's.

"Provider-based billing is allowed because clinics that are outpatient departments of a hospital must comply with stricter quality standards than non-hospital-based clinics," Laughlin wrote in a statement to the News Tribune. "The facility fee helps offset the costs of meeting these higher standards."

St. Luke's went to the system in 2014, he wrote, and has had postings in its facilities to that effect since then. St. Luke's officials are checking to make sure the wording complies with the new law.

For Essentia, the actual posting of a statement “is slightly new,” Pilot said. “But we’ve always made our patients aware that they are entering the hospital.”

St. Luke's has the 25-procedures list posted at its facilities, Laughlin wrote.


"As healthcare consumers become more engaged in value, price transparency is helping provide the information they need to make more informed choices," he wrote. "We know St. Luke's provides excellent care at a good value, and we are proud to showcase that."

Like Pilot, though, he noted that the amounts on the list and the amounts a specific patient might wind up paying will vary depending on insurance plans.

Which is where Pilot said he'd like to see more information available to consumers.

“I would like to see more transparency from our insurance companies,” he said. “That’s really where the patient is going to get the best idea of what they’re going to have to pay.”

Draheim said his “right-to-shop” bill would allow a consumer to turn to a less expensive provider for a certain procedure or service even if that provider was out of the consumer’s insurance network. The patient would keep half of the savings, and the other half would compensate the insurer.

State Rep. Liz Olson, DFL-Duluth, said there was bipartisan interest in the Legislature on the issue of health care costs during the 2019 session.

“We don’t necessarily agree across the aisle all the time on how we’re going to get there,” she said. “But I think there was a general consensus that costs are out of control, and what are the mechanisms to control that that we can work together on?”

There’s unfinished business to turn to in the 2020 session, most notably the cost of insulin, Olson said. But she and other legislators also will be looking at ways to control costs and have more transparency regarding prescription drugs in general.

Robinson is looking for more fundamental change. He regards laws such as the facility fee disclosure bill to be “very slightly helpful.”

Even if the consumer has information about the cost, Robinson said, he or she is able to do anything about that only in certain, limited circumstances. He cited studies suggesting that such disclosures only affect roughly 10% of the total cost of medical care.

Besides, he said, the health care system is so complex that even if there were total price transparency, most consumers would find it bewildering.

Robinson instead favors a global budget system, which has been used in national health care systems to determine the amount of money that will be reimbursed to all hospitals, clinics and physicians. It’s used by many other countries, including Canada, Robinson said, producing savings.

“Where the average American-sized hospital has about 200 people to do billing work, that same-sized hospital in Canada has about one or two,” he said. “They simply send one bill a month to the government payer.”

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