A facility fee is a separate charge that hospitals add to your bill for using their building, equipment, and infrastructure, on top of what you pay for the doctor’s actual care. If you’ve ever been surprised by a second charge on a medical bill after a routine office visit, this is likely what you were looking at. Facility fees can add hundreds of dollars to an outpatient visit, and they’re one of the fastest-growing sources of healthcare costs for patients.
How Facility Fees Work
When you see a doctor in a hospital-owned clinic or outpatient department, you typically receive two separate bills. The first is the professional bill, covering the physician’s or nurse practitioner’s time and expertise. The second is the institutional bill, which is the facility fee. It covers everything beyond the clinician’s services: the building, nursing staff, medical equipment, and general overhead.
When that same doctor works in an independent practice not owned by a hospital, those overhead costs are bundled into one bill. You pay a single charge. But the moment a hospital acquires that practice, it can start billing separately for the facility, even if nothing about the office, the staff, or your visit has changed. This is the core frustration patients and policymakers have with facility fees: the same exam in the same room can cost significantly more simply because a hospital now owns the practice.
What Facility Fees Are Supposed to Cover
Hospitals argue these fees are necessary to fund services that independent clinics don’t provide. Unlike a freestanding doctor’s office, a hospital system maintains emergency and trauma departments around the clock, staffed with physicians, nurses, and specialized equipment at all hours. If you have a medical emergency during an outpatient visit at a hospital-affiliated clinic, staff can immediately transfer you to the emergency department rather than calling 911 and waiting. Facility fees also help fund drug therapies, diagnostic equipment, and the physical infrastructure hospitals are required to maintain.
That said, the fees are not necessarily tied to the specific costs of your visit or the setting where you received care. A hospital can charge a facility fee at an off-campus clinic miles from the main hospital campus, where the overhead and emergency capabilities look nothing like a full hospital.
How Much Facility Fees Add to Your Bill
The exact amount varies widely depending on the service, the hospital, and your insurance. But the financial impact is well documented. One study found that when hospitals acquired independent physician practices, commercial prices for all services at those practices increased by 14.1 percent. Other estimates suggest facility fees account for 45 percent or more of the price increases that follow hospital acquisitions.
For patients, these costs show up in two ways. If you have coinsurance (a percentage of the bill rather than a flat copay), you pay a share of both the professional fee and the facility fee. About 67 percent of workers with employer-sponsored insurance have coinsurance averaging 20 percent for outpatient procedures. Those with copayments for hospital charges pay an average of $186 per visit. Between 2013 and 2019, consumer spending on outpatient services grew 34 percent, driven in part by the spread of facility fee billing as hospitals bought more physician practices.
The ripple effects extend to premiums too. Research on California’s insurance marketplace found that hospital consolidation in concentrated markets was associated with a 12 percent increase in premiums.
Facility Fees in Telehealth Visits
Yes, facility fees can even apply to telehealth. Under Medicare rules, a telehealth originating site fee of roughly $30 can be charged when you receive care via video or phone. Medicare pays 80 percent of that amount, and the patient covers the rest through coinsurance and any unmet deductible. Some states have pushed back on this. Connecticut, for example, prohibits facility fees on telehealth services, a rule that originated during the COVID-19 pandemic and has been extended.
Medicare Rules and Notice Requirements
Medicare allows hospital-owned outpatient departments to bill facility fees under what’s called provider-based status. When you visit a hospital outpatient clinic that’s not on the main hospital campus, you’ll owe coinsurance for the facility fee in addition to what you owe for the physician’s services. This coinsurance would not apply if the same clinic operated independently.
Federal rules require the hospital to give you written notice before your visit, explaining that you’ll be charged a facility fee you wouldn’t face at a non-hospital-owned office. In practice, many patients don’t realize what this notice means until the bill arrives.
Protections Under the No Surprises Act
The No Surprises Act, which took effect in 2022, offers some protection, though it doesn’t eliminate facility fees. The law prevents out-of-network providers from sending you a “balance bill” (charging you the difference between their price and what your insurer pays) in most emergency situations and for non-emergency care from out-of-network providers at in-network facilities. Your plan also cannot charge you more in cost-sharing for these protected services than it would for equivalent in-network care.
There are limits. The law does not apply to non-emergency services at out-of-network facilities. And providers can ask you to voluntarily waive your balance billing protections for certain scheduled, non-emergency services, though they must give you a notice and consent form. They cannot ask you to waive protections for ancillary services like anesthesiology, radiology, pathology, or diagnostic lab work.
Price Transparency Requirements
Federal rules now require hospitals to publish their standard charges in machine-readable files available to the public. This includes facility fees. Under the CMS hospital price transparency rule, hospitals must disclose charges for all items and services associated with inpatient admissions and outpatient visits, including what the regulation describes as “use of the facility and other items (generally described as facility fees).” In theory, this lets you compare costs before scheduling a visit, though navigating these files remains difficult for most people.
State Laws Limiting Facility Fees
Several states have taken direct action. Connecticut prohibits off-campus hospital outpatient departments from charging facility fees for standard office visit services (evaluation and management codes) and is extending that ban to on-campus facilities with some exceptions. Maine has restricted facility fee billing at office settings for nearly two decades and now requires claims to identify the exact physical location where care was provided. Indiana passed limits on outpatient facility fee billing at off-campus locations owned by large nonprofit health systems in 2023.
These state laws only apply to state-regulated insurance plans, so they don’t cover Medicare or self-funded employer plans governed by federal law.
Site-Neutral Payment Policies
The biggest potential shift is a policy concept called site-neutral payment, which would pay the same rate for the same service regardless of where it’s performed. Under current Medicare rules, a hospital outpatient department can be paid significantly more than an independent office for identical care. Site-neutral proposals would close that gap by discounting the hospital outpatient rate by roughly 60 percent to match what Medicare pays independent practices.
So far, Medicare has applied site-neutral rates only to a narrow slice of services: those at off-campus hospital departments that began operating after November 2015. Because most hospital outpatient departments are exempt from this rule, just 1.5 percent of all outpatient services paid under the hospital system were subject to site-neutral pricing as of 2025. CMS proposed expanding site-neutral rates to drug administration services at exempt off-campus departments starting in 2026, but that proposal had not been finalized at the time of the announcement.
If site-neutral payment were broadly adopted, it would reduce both Medicare spending and the out-of-pocket coinsurance patients owe, since coinsurance is calculated as a percentage of the total allowed charge. It would also reduce the financial incentive for hospitals to acquire independent practices primarily to capture higher facility-based payments.