Hidden fees cost Michigan patients millions. Lawmakers push reforms
[October 14, 2026]
By ROBIN ERB/Bridge Michigan
Michiganders are paying millions of extra dollars in healthcare bills
each year, often paying to help operate hospitals they’ve never even
visited.
There’s no way to tell precisely how much they’re paying: “ Facility
fees ” are usually buried deep in bills, and hospitals aren’t required
to publicly disclose how much they collect from them.
The fees traditionally cover costs associated with healthcare like
laundry, computer networks and security. Hospitals say they need the
money to stay afloat and are increasingly adding the charges to
outpatient services, such as labs and physicians’ offices.
But they don’t disclose many basic details about the fees, prompting a
bipartisan push for reform. In Lansing, legislation would prohibit the
fees when care is provided at sites outside of hospitals, telemedicine
appointments and some in-hospital outpatient services.
The legislation came after state Rep. Curt VanderWall, R-Ludington,
requested an itemized bill for a routine blood test. He said he had
heard from constituents about their bills increasing after their
doctors’ offices and labs were purchased by large healthcare systems.
A single draw yielded three vials of blood to be tested, VanderWall
said.
“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,” he told fellow lawmakers in August.
Facility fees added an average of $100 to primary care doctor bills in
2022, according to one estimate. While no reliable statewide estimate
exists, the fees alone for Medicaid are easily tens of billions of
dollars, according to a federal report.
States including Ohio and Indiana have begun limiting how hospitals can
charge the fees, while others are debating legislation to cap them,
increase transparency or require “ site-neutrality ” so charges remain
the same across hospital facilities, according to the Center on Health
Insurance Reforms at Georgetown University.
Since 2010, Rhode Island has limited annual increases of facility fees,
which a Brown University study concluded slowed the growth of the
state’s hospital charges by 9% compared with other states and slowed
consolidation, but it cost hospitals $160 million.
Hospitals contend the charges are crucial to their survival. They
typically operate at thin profit margins — 2.6% nationally last year —
and 33 Michigan hospitals either lost money or operated at a 0% margin
in 2024, the most recent year for which data was available, according to
the National Academy for State Health Policy, a Washington DC nonprofit.
Since then, three of those facilities — hospitals in Sturgis, East China
and Ontonagon — have closed.
Some lawmakers say that more could follow if facility fees are
restricted.
“This could destabilize even more institutions within the Upper
Peninsula that are standalone and are literally struggling to keep the
doors open,” state Rep. David Prestin, R-Cedar River, said at a hearing
in August.
“I worry that this could be a tipping point for even more.”
‘Black box’ of costs
It’s difficult to measure the extent to which facility fees drive
individual medical bills and even overall healthcare costs.
Michigan’s largest hospital systems would not disclose how much they
collect, despite repeated requests from Bridge Michigan.
The state does not track the fees, nor does the state’s hospital
association, according to spokespersons of both.
But experts said there are some clues that the costs are significant.
Typical nonemergency visits to a doctor cost $43 extra in a
hospital-based outpatient department compared with a non-hospital
physician’s office in 2022, according to a review by the Health Care
Cost Institute.
It found that hospital-based labs charged more than three times more for
tests than independent labs or physicians offices in employer-sponsored
healthcare plans.
The fees may go unnoticed by many patients because insurance picks up
the costs.
If patients notice an increase in charges, it can be hard to break down
a medical bill — let alone research fees ahead of time, said Bret
Jackson, CEO of the Economic Alliance of Michigan, a Novi-based
nonprofit focused on the state’s economy and healthcare.
He calls healthcare bills a “black box.”
“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,” he said.
All too often, information is “simply not available” to consumers,
Jackson said.
Push for transparency
Price transparency has become an issue in the governor’s race, with both
Democrat Jocelyn Benson and Republican John James saying they would
require hospitals to disclose costs upfront to patients.
A current US representative, James sponsored the Patients Deserve Price
Tags Act last year that would require hospitals to publish “ clear,
upfront information ” about pricing.
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Benson has said she wants to create an online portal to report hospitals
that don’t disclose costs. She would empower the Michigan Department of
Health and Human Services to handle complaints — and refer violators to
the attorney general.
Even so, efforts to boost transparency have proven lackluster
nationwide.
The U.S. Centers for Medicare & Medicaid Services requires hospitals to
make public “machine-readable” prices.
They’re often listed through billing codes and jargon that make
deciphering them difficult for consumers, said Shoshi Preuss, a state
advocacy manager for United States of Care, a Washington DC-based
nonprofit that tracks federal and state health policies.
Fewer than 1 in 5 hospitals owned by the nation’s largest health systems
— and 10 of 46 in Michigan — make clear the costs for at least half of
their posted items and services, according to a review last month by
PatientRightsAdvocate.org.
This summer, the Trump administration warned more than 500 of the
nation’s hospitals, including 13 in Michigan, that they were failing to
provide the public with basic pricing information, according to an
Associated Press news report.
This month, the Federal Trade Commission sent warning letters to 24 of
the “nation’s largest healthcare services companies” reminding them of
their obligations.
The letters did not explicitly state the recipients violated the rules,
nor did the Trump administration name the 24 companies.
Part of the problem is that there is no simple way to be transparent,
Josh Traylor, a former health policy expert at the US Center for
Medicare & Medicaid Innovation and now executive director at the Center
for Health and Research Transformation at the University of Michigan.
Costs for a service or procedure don’t just vary from facility to
facility — but also from insurer to insurer and from plan to plan within
the same insurer.
“Blue Cross might have 10 different prices for a knee replacement,” he
said.
And insurers and hospitals carefully guard the details of their
contracts, Traylor said.
With some exceptions, like this page by the University of Michigan
Health, finding prices for care isn’t a simple click or two. Hospitals
instead suggest consumers call for pricing or use their tools to input
insurance policies.
That allows more precise and accurate pricing, because it incorporates a
patient’s insurance coverage.
Healthcare is ‘wildly complex’
Facility fees have been charged for years — and limiting them now could
threaten hospitals when they face multiple challenges, said Elizabeth
Kutter, a vice president at the Michigan Health & Hospital Association.
“Healthcare is wildly complex,” she said. Likewise, “financing
healthcare is wildly complex,” she added.
(Editor’s note: The Michigan Health & Hospital Association is a funder
of Bridge Michigan. It was not involved in the reporting or editing of
this story.)
The fees help cover costs that aren’t obvious in care: electronic
medical records and cybersecurity, laundry and janitorial staff, and
round-the-clock, doctors and nurses even when business is slow.
The charges offset rising costs of drugs and other healthcare costs,
advocates say.
Limiting the fees could cost hospitals nationwide as much as $180
billion over 10 years, according to the American Hospital Association.
Over that same period, the federal government anticipates some $655
billion in cuts to Medicaid.
Rural hospitals are some of the most at risk, because low volumes of
patients and a shortage of providers add uncertainty to already-thin
budget margins.
“People think hospitals make insane amounts of money because they see
new equipment or new facilities, but that’s really what is required to
continue to offer high-quality care to patients and what they expect,”
said Ross Ramsey, CEO of Scheurer Health in Pigeon at the tip of the
Thumb along Lake Huron.
The hospital expects to collect $125,000 in facility fees this year to
stretch its $125 million budget.
The hospital is staffed during slow times and offers outpatient sites so
patients don’t have to drive an hour or more for routine care like
physical therapy.
The fees offset costs that aren’t obvious to many patients, such as free
translation services to non-English speaking residents that are required
by law, cleaning of janitorial supplies and maintaining backup
generators to operate the hospital.
“We’re not adequately reimbursed for these types of things, so that’s
why (we) need to make it up elsewhere,” Ramsey said.
Patients, he added, “don’t realize how tight of a tight walk we already
walk on a good day.”
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