Insight, analysis & opinion from Joe Paduda

< Back to Home


Those damn facility fees

If you are a work comp payer, you don’t have to pay those ridiculous facility fees when care is delivered outside the hospital – at least not in Pennsylvania.

That’s the decision rendered by the Pennsylvania Bureau of Workers’ Compensation in a case dating back to 2017. The case arose when a hospital (which I promised not to identify) tried to get reimbursed for care delivered by an affiliated provider, which was NOT “located within XXX hospital”.

The details

The hospital, a “Part A provider and billing entity” didn’t provide the billed services, rather a

“part B provider whose clinic [was] not located with[in] XXX hospital performed, billed, and was reimbursed for services.  XXX hospital is not entitled to payment as XXX hospital provided no medical services…”

The actual provider – a “part B provider” affiliate of XXX hospital, delivered the services, submitted a bill and supporting documentation, and was reimbursed.

The hospital also submitted a bill along with documentation that the treating provider had a professional services agreement (PSA) in place with the hospital.

Notably, the PSA “designates that all care and treatment is rendered by [the affiliate’s] personnel, therefore the payer’s attorney questioned exactly what XXX hospital was “providing.”

There’s a LOT more to this; location codes, provider details, Medicare regulations, bill types and the like are all important. The knowledge level required to correctly reimburse and successfully uphold a denial of payment for facility fees in PA is quite impressive; the entity providing that expertise has a wealth of experience and expertise in the Keystone State.

The cost reduction is equally impressive .

What does this mean for you?

  1. If you are paying facility fees for care delivered outside of a hospital (Part A) provider, you better get your act together.
  2. Expertise is way more important than price or throughput.

2 thoughts on “Those damn facility fees”

  1. Sounds like the hospital isn’t up to date on their fraud, waste, and abuse training. It baffles me what justification the hospital thought they had to bill for services they didn’t provide. Having spent my career in provider and payor contracting, I can’t imagine how you’d even structure a PSA such that it entitles an entity like the hospital to bill for services provided by another entity, solely on the basis of having a contractual arrangement. Even if they did put that language in their contract, how can they expect to make it binding on a payor who isn’t a party to that agreement?

    Interesting that PA has such strict rules making it difficult to uphold a denial. When I was working for a hospital system in CA, we had the opposite problem – denials were commonplace, and a significant portion of our claims shop’s bandwidth was dedicated to appealing these denials to make sure the hospital was paid for legitimate claims.

    1. Thanks for the note and observations Andrew. in work comp when you’ve seen one state you’ve seen what state.

      be well Joe

Comments are closed.

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



© Joe Paduda 2023. We encourage links to any material on this page. Fair use excerpts of material written by Joe Paduda may be used with attribution to Joe Paduda, Managed Care Matters.

Note: Some material on this page may be excerpted from other sources. In such cases, copyright is retained by the respective authors of those sources.