LANSING, Mich. (WOWO) — Michigan lawmakers are pushing to restrict hospital facility fees that can add unexpected charges to medical bills, including routine blood tests and doctor visits, as patients struggle to understand healthcare costs and hospitals warn that limiting the fees could threaten their financial stability.

The bipartisan reform effort follows complaints from patients who say their bills increased after independent doctors’ offices and laboratories were acquired by larger healthcare systems. Proposed legislation would prohibit facility fees for certain services provided outside hospital campuses, telehealth appointments and some outpatient services inside hospitals.

State Representative Curt VanderWall, a Ludington Republican who sponsored the legislation, said he sought an itemized bill after a routine blood draw and was surprised by the additional charges.

“I was shocked to see that 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,” VanderWall told fellow lawmakers in August.

Facility fees are additional charges hospitals and health systems apply to services delivered at certain facilities, including outpatient clinics, laboratories and doctors’ offices. Hospitals say the fees help cover the broader costs of operating a healthcare system, including electronic medical records, cybersecurity, cleaning, security and staffing.

But patients may pay more for care that has not changed simply because the location where they receive it is owned by a hospital system.

The total amount Michigan patients pay in facility fees remains unclear. Neither the state nor the Michigan hospital association tracks the charges, and the state’s largest hospital systems have declined to disclose how much they collect, according to Bridge Michigan.

Research cited by the publication illustrates the potential impact. A Health Care Cost Institute review found that nonemergency visits to hospital-based outpatient departments cost an average of $43 more than visits to non-hospital physician offices in 2022.

The same organization found hospital-based laboratories charged more than three times as much for tests as independent laboratories or physician offices for patients covered by employer-sponsored health insurance plans.

One estimate put facility fees added to primary care bills at an average of $100 in 2022.
The lack of clear pricing can make it difficult for patients to determine what they are being charged for, particularly when insurance covers some of the bill or when charges are buried among billing codes and other technical language.

Bret Jackson, president and CEO of the Economic Alliance of Michigan, described healthcare billing as a “black box,” saying consumers may need to make repeated calls and challenge charges to get an understandable explanation.

“If you really dig your heels in, if you really fight back and are willing to go through phone call after phone call, and beat your head against the wall, maybe eventually — and it does happen — people can eventually get what they’re looking for,” Jackson said.

The proposed restrictions have raised concerns about the financial health of hospitals, particularly in rural communities. Hospitals generally operate on thin margins, and 33 Michigan hospitals either lost money or operated at a zero-percent margin in 2024, according to the National Academy for State Health Policy.
Since then, hospitals in Sturgis, East China and Ontonagon have closed.

State Representative David Prestin, a Cedar River Republican, warned during an August hearing that limiting facility fees could put additional pressure on rural hospitals, particularly in the Upper Peninsula.

“This could destabilize even more institutions within the Upper Peninsula that are standalone and are literally struggling to keep the doors open,” Prestin said. “I worry that this could be a tipping point for even more.”
Hospital advocates argue the fees help pay for expenses that patients may not see during an appointment.

Those costs include maintaining electronic medical records and cybersecurity systems, keeping facilities clean, providing security and staffing hospitals around the clock even during periods of low patient volume.
The Michigan Health and Hospital Association has also pointed to rising drug and other healthcare costs.

The American Hospital Association estimates restrictions on facility fees could cost hospitals nationwide as much as $180 billion over 10 years.

Ross Ramsey, CEO of Scheurer Health in Pigeon, said facility fees help support outpatient locations that allow rural residents to receive services such as physical therapy without driving an hour or more to a hospital. Scheurer expects to collect $125,000 in facility fees this year against a $125 million budget.

Ramsey said hospitals also absorb expenses for services that may not be adequately reimbursed, including legally required translation services and backup generators.“We’re not adequately reimbursed for these types of things, so that’s why (we) need to make it up elsewhere,” Ramsey said.

The debate comes as healthcare price transparency gains attention nationally and in Michigan’s gubernatorial race. Democratic candidate Jocelyn Benson has proposed an online portal where patients could report hospitals that fail to disclose costs. Republican candidate John James has also called for hospitals to provide clearer pricing information upfront.

Federal rules already require hospitals to publish prices in machine-readable formats, but consumer advocates say the information can be difficult to interpret because it often relies on billing codes and technical terminology.

A recent review by PatientRightsAdvocate.org found that only 10 of 46 Michigan hospitals examined clearly disclosed prices for at least half of their listed items and services.

The Federal Trade Commission also sent warning letters to 24 major healthcare services companies in October reminding them of their obligations regarding potentially deceptive pricing practices. The letters did not explicitly accuse the recipients of violating the rules.

Even when hospitals publish prices, estimating what an individual patient will owe can be complicated by differences among facilities, insurance companies and individual insurance plans. Healthcare policy experts say those variations make straightforward comparisons difficult.

The Michigan legislation seeks to limit certain facility fees, but the debate reflects a broader question: how to protect patients from unexpected charges while ensuring hospitals have the resources to maintain services, particularly in rural areas already facing financial challenges.