LANSING, Michigan – After a routine blood draw left State Representative Curt VanderWall facing an unexpected $75 facility fee, Michigan legislators are moving to restrict such charges. The bipartisan bill would bar hospitals from applying facility fees to services delivered outside their campuses, to telehealth appointments, and to certain outpatient procedures performed within hospital buildings.
What are facility fees?
Facility fees are additional amounts that hospitals and health systems tack onto the price of services rendered in outpatient clinics, laboratories, and doctors’ offices. Hospitals argue the fees help cover the broader costs of running a health system, including electronic medical records, cybersecurity, cleaning, security, and staffing.
Why the push for reform?
VanderWall, a Ludington Republican who sponsored the legislation, said he was shocked to see a separate fee for each vial of blood drawn. “I was charged a facility fee for each vial of blood that was drawn — nearly an extra $75 just for that one case of the blood draw,” he told fellow lawmakers in August.
Patients across the state have complained that facility fees inflate their bills without any change in the actual care they receive. A review by the Health Care Cost Institute found that non‑emergency visits to hospital‑based outpatient departments cost an average of $43 more than visits to independent physician offices in 2022. The same study showed hospital‑based labs charged more than three times as much for tests as independent labs or physician offices for patients with employer‑sponsored insurance.
Potential impact on rural hospitals
Hospital advocates warn that limiting facility fees could strain already‑thin margins, especially in rural areas. In 2024, 33 Michigan hospitals either lost money or broke even, according to the National Academy for State Health Policy, and several facilities in Sturgis, East China, and Ontonagon have already closed.
State Rep. David Prestin, a Cedar River Republican, cautioned that the proposal could destabilize more Upper Peninsula hospitals that are “literally struggling to keep the doors open.” He warned it might become a tipping point for additional closures.
Support for the fees
Hospital leaders argue the fees are essential to cover costs that patients do not see during an appointment. Ross Ramsey, CEO of Scheurer Health in Pigeon, said facility fees help sustain outpatient locations that bring services like physical therapy to rural residents without requiring long drives to a main hospital. Scheurer expects to collect $125,000 in facility fees this year against a $125 million budget.
Ramsey also noted that hospitals absorb expenses for legally required translation services, backup generators, and other items that are not fully reimbursed by insurers. “We’re not adequately reimbursed for these types of things, so that’s why we need to make it up elsewhere,” he said.
Transparency and consumer advocacy
Consumer advocates point to a lack of clear pricing. A recent review by PatientRightsAdvocate.org found only 10 of 46 Michigan hospitals examined disclosed prices for at least half of their listed items and services. The Federal Trade Commission has also sent warning letters to 24 major healthcare service companies reminding them of obligations to avoid deceptive pricing practices.
Bret Jackson, president and CEO of the Economic Alliance of Michigan, described the billing system as a “black box,” urging patients to persist with phone calls and challenges to obtain understandable explanations.
Political context
The debate arrives as health‑care price transparency becomes a national issue and a campaign topic in Michigan’s gubernatorial race. Democratic candidate Jocelyn Benson proposes an online portal for patients to report hospitals that fail to disclose costs, while Republican candidate John James calls for clearer upfront pricing.
Federal rules already require hospitals to publish prices in machine‑readable formats, but many consumers find the data difficult to interpret because it relies on complex billing codes.
Next steps
The bill now heads to committee hearings, where lawmakers will weigh the need for consumer protection against the financial realities of rural hospitals. If enacted, the legislation could reshape how Michigan’s health‑care system bills patients for routine services, potentially setting a model for other states grappling with similar transparency concerns.
Original reporting: WOWO News/Talk (Fort Wayne) — read the source article.
