John C. Davis of O’Hara thought he had scheduled a routine exam at his dermatologist’s office in Harmar a few months ago.
He later found out that the office — a reception area and exam rooms above a gym on Freeport Road — was no office at all. UPMC’s billing department says it’s a hospital.
Mr. Davis discovered this when he received two bills in the mail after his 20-minute visit — one from his physician and one from UPMC St. Margaret Hospital, which is about five miles down the road.
“Other than the name, there is no obvious association with St. Margaret Hospital,” said Mr. Davis, who had UPMC Health Plan insurance. “Nevertheless, this office systematically double-bills its patients for hospital services. It’s a scam.”
Many patients might agree with Mr. Davis.
But what UPMC does — and plenty of other hospitals including some of Highmark’s Allegheny Health Network hospitals do as well — is a billing practice allowed by Centers for Medicare & Medicaid Services, or CMS.
Under Medicare regulations, freestanding clinics such as St. Margaret Dermatology can be designated as a hospital-based facility. Among other things, that means the clinic can charge inpatientlike amounts for outpatient care.
“It is a Medicare-accepted methodology. That’s why hospitals do it. And until the Medicare regulations change, it will probably continue,” said Denis Lukes, vice president of financial services for the Hospital Council of Western Pennsylvania.
At the same time, he acknowledged, “from the patient’s perspective, it’s hard to see that.”
UPMC spokeswoman Jennifer Yates said the Harmar facility has been designated as “hospital-based” since it opened in 2011.
“Under well-established CMS guidelines and many insurer contracts, facility fees may be charged in hospital-based clinics to reflect the cost of services and of meeting certain regulatory standards regarding patient safety and quality,” she said. “Any such fees charged by UPMC are in compliance with CMS guidelines and UPMC’s insurance contracts.”
Mr. Lukes said hospitals believe they need to maximize their revenue to make up for lost reimbursement from programs such as Medicare and Medicaid. The “free” care provided to those who can’t pay has to be covered to keep the emergency room doors open, he said, so that cost is shifted to others.
“They can get paid for both [physician and hospital services] in this environment today and they need to get paid for both.”
Mr. Davis has his own assessment: “They’re gaming Medicare.”
He also believes UPMC does not do enough to let patients know what is going on. He’d asked how much the visit would cost when he made the appointment. “They said, ‘We have no idea.’ That was a great opportunity for them to say, ‘This is a hospital-based clinic,’ but they did not.”
Ms. Yates said, “We are transparent with patients about our hospital-based facilities, through signage and on our website, and about the fact that facility fees may apply.”
Indeed, there is a sign in the dermatologist’s office alerting patients that it is a hospital-based clinic, although Mr. Davis said the information about getting a second bill would not necessarily be clear to patients unless they took the time to read the full text.
Besides, he noted, “I was already there for the appointment, which I had waited six weeks to get. What was I going to do?”
Five months after his visit, Mr. Davis said he has paid the physician bill — but not the hospital bill.
He did send a check for $1, to make a point.
He then promptly heard from a collection agency about the remaining $114 balance, which he does not intend to pay. He has also cancelled a follow-up visit at the clinic scheduled for next month.
“It’s not about the money,” said the retired chemical engineer. “It’s that this is total subterfuge and it should not be allowed.”
Steve Twedt: email@example.com or 412-263-1963.