Facility fees drive up the costs of routine health care

Imagine seeing your family doctor for a routine visit. Same doctor, same exam room you’ve been to dozens of times.

Then two bills arrive.

The second bill – this one for a “facility fee” – comes from a hospital you never visited. 

Welcome to the world of facility fee billing, where hospitals can quietly change how much you pay for everyday care. 

What’s happening 

When hospital systems buy independent medical practices, those offices can be reclassified as hospital outpatient departments. That administrative change allows providers to bill not only for your clinician’s services, but also for the “facility fee” even though nothing about your visit has changed. 

Facility fees are meant to cover hospital operating costs such as licensing, regulatory requirements and general overhead. But when applied to routine office visits that don’t require hospital-level resources, they typically raise patients’ costs without any benefit.

The numbers tell the story 

Recent research from the Health Care Cost Institute  sheds light on how widespread this practice has become and what states are doing to protect consumers.

In 2022, just 1.24% of routine office visits nationwide included a facility fee. That may sound small — until you consider how many office visits happen every year. Researchers estimate additional facility fees translated to more than $65 million in added charges to consumers.

Why this matters 

Facility fees make health care harder to navigate and harder to afford: 

• Unanticipated charges. Most patients don’t know a facility fee is coming until the bill arrives, making it nearly impossible to budget or comparison shop. 
• Higher prices without added value. People end up paying hospital prices for office-based care, often with no clinical justification or improvement in quality. 
• Routine care becomes expensive. The largest share of facility fee spending comes from common services such as primary care and internal medicine — exactly the visits people rely on for preventive care and chronic condition management. 

There is good news

• From 2018 to 2022, facility fee billing declined modestly nationwide —about $121 million — suggesting that increased attention and regulation are starting to make a difference.

• As of today, 20 states have passed legislation addressing facility fees through restrictions, advance notice requirements and data collection. Congress is also paying attention, proposing changes that would make hospital billing more transparent though no federal action has been finalized. 

Has a “facility” fee appeared on your health care bill? What did you do? Share your story with Voices for Affordable Health.