What is provider-based billing and facility fees?
Provider-based billing was introduced in 2000 to improve access to care for patients on Medicaid and charity care. At the time, some physician practices limited or refused appointments for these patients due to low reimbursement rates. To encourage broader access, Medicare and Medicaid established an additional reimbursement mechanism—often reflected on statements as a facility fee—for clinics that meet provider-based billing requirements.
At Great Plains Health (GPHealth), about 70% of our patients are on Medicare, Medicaid, or are uninsured. Medicare reimburses approximately 80% of the cost of care, Medicaid about 60%, and charity care provides little or no reimbursement. Additionally, federal law (EMTALA) requires hospitals with emergency departments to treat all patients, regardless of their ability to pay. This creates financial challenges, as the cost of care often exceeds what hospitals receive in reimbursement. To stay financially viable, the U.S. healthcare system offsets these losses by shifting some costs to commercially insured patients.
To qualify as a provider-based clinic, the clinic must be owned and operated by a nonprofit organization. Nonprofit hospitals, like GPHealth, reinvest all revenue back into their mission of providing healthcare rather than distributing profits to shareholders. Additionally, provider-based clinics must treat Medicaid patients the same as privately insured patients, ensuring equitable access to care.
GPHealth was one of the last hospitals in Nebraska to implement provider-based billing, doing so in 2018. Even now, our pediatric, family medicine and urgent care clinics have not adopted this model, despite qualifying for it. However, if you visit a hospital-based family practice clinic in Ogallala, Gothenburg, Cozad, Lexington, and surrounding communities, you will encounter facility fees, as these clinics have operated under provider-based billing for years. It might be reflected as a technical fee, room charge, institutional fee or hospital charge, but it is the allowed charge under provider-based billing.
We recognize that healthcare costs are a major concern. Price transparency laws allow patients to compare hospital charges, and tools like the app Try Billy make it easy to search healthcare pricing by procedure. GPHealth participates in industry-wide pricing analyses, comparing our charges with similar hospitals in Nebraska. Our charge index is 89.36, meaning our charges are approximately 8% lower than the average for comparable hospitals in Kearney, Grand Island, Hastings and Scottsbluff. These comparisons are illustrated in the graph below.
Across the country, independent physician practices are joining health systems at a rapid pace due to increasing government regulations, insurance complexities and human resource challenges. GPHealth supports independent practices and only employs physician groups when requested to do so. A great example is North Platte OB/GYN, a private practice providing exceptional care in our community.
