With more outpatient care being delivered in hospital outpatient departments (HOPDs) than in previous years due to vertical consolidation, consumers increasingly face high hospital facility fee charges on top of their provider’s bill for routine medical care. These facility fees are a lucrative revenue stream for hospitals, but they place a large financial burden on consumers.
Increasing awareness about the growth in the amount and prevalence of these charges has driven many states to address this issue in their state legislatures. Several states pursued reforms that would limit hospitals’ ability to charge outpatient facility fees and better protect consumers from such charges. States also sought to build their internal capacity to tackle these topics by requiring greater transparency and commissioning studies. Hospitals’ opposition to facility fee reforms has been fierce, however, and only a handful of states have brought their bills over the finish line during the 2024 legislative session.
State Legislation to Regulate Outpatient Facility Fees
States Across the Finish Line
Maine, Maryland, and Connecticut successfully passed legislation regarding facility fees this session. Notably, each of these states has enacted some facility fee reforms in the past, as documented in CHIR’s 2023 report and issue brief on state regulation of outpatient facility fees. Passage of the latest legislation in these states emphasizes the incremental nature of reform in this area.
As CHIR reported last year, Maryland currently requires hospitals to provide written and oral notices to consumers when charging a facility fee for outpatient clinic services, supplies, or equipment, excluding emergency department services. This year, Maryland legislators considered bills that would expand these notification requirements to more services and providers. Legislators, facing pushback, ultimately passed a bill that does not change existing requirements for hospitals, but tasks the Maryland Health Services Cost Review Commission to study outpatient facility fee billing and related reforms with the goal of convening a multi-stakeholder workgroup on expanding notice requirements. These efforts are expected to generate recommendations to the legislature for future action later this year and in 2025.
Both Connecticut and Maine have prohibitions on outpatient facility fee billing already on their books. Connecticut prohibits off-campus HOPDs (excluding freestanding emergency departments) from charging such fees for evaluation and management (E&M) and assessment and management (A&M) services, and will extend this prohibition to on-campus facilities in July (subject to some exclusions). Connecticut also has a soon-to-expire prohibition on facility fees for telehealth services that dates to the COVID-19 pandemic. This session, the Connecticut legislature extended its prohibition on facility fees for telehealth services that dates to the COVID-19 pandemic and had been set to expire at the end of June 2024.
Maine has limited facility fee billing for care provided in office settings for nearly two decades. Following news reports on patients facing unexpected facility fee charges, state legislators revisited the topic last year, ultimately creating a task force to evaluate facility fee billing and make legislative recommendations. This law also required Maine’s all payer claims database to produce annual reports on facility fee charges. Based on the task force’s report, Maine lawmakers passed legislation requiring health care entities to post facility fee notices on their website and on-site. These notices must advise patients whether the entity is a hospital-based facility, and if so, identify the hospital or health system that owns or operates the entity and whether or not it charges facility fees. The notice must also direct consumers to a state agency website with more information about the circumstances in which facility fee charges are permitted. Maine legislators also enacted a bill requiring that health care facility claims identify the physical location where a service was provided, including hospital off-campus locations.
Notable Efforts
Additional legislators across the country introduced a range of measures to reform or shed light on facility fee billing, but their bills failed to pass before their state’s legislative sessions ended.
Lawmakers in Washington sought to prohibit off-campus facility fee billing, in addition to expanding the state’s consumer notification requirements and introducing transparent billing requirements on claims forms. Other states introduced proposals prohibiting providers from charging facility fees for a more narrowly tailored set of procedures and care settings. Legislators in Connecticut sought to expand facility fee prohibitions to off-campus drug administration and injection and infusion services, and require off-campus HOPDs to acquire a unique national provider identifier and use this on all claims. Vermont legislators proposed to limit certain outpatient facility fee billing, but did not specify which items or services should be affected.
Other states focused exclusively on transparency requirements. Legislators in Florida sought to strengthen their existing consumer notification requirements for facility fees, which would have continued to be embedded within good faith estimates for non-emergency procedures.
In Indiana, a state that passed limitations on outpatient facility fee billing at off-campus HOPDs owned by large non-profit health systems in 2023, lawmakers introduced a bill that would require hospitals to report certain ownership information to the Department of Health. Because increases in outpatient facility fee billing are largely driven by hospital acquisitions of outpatient practices, ownership information can provide important insights for state policymakers interested in facility fee reforms. The proposal passed the House, but ultimately died in the Senate.
Still Running
Three states are still considering facility fee reform bills as their legislative sessions remain open.Illinois lawmakers introduced a bill that draws on Connecticut’s prohibitions on outpatient facility fee billing and notification requirements, while Arizona legislators introduced a proposal that would prohibit certain outpatient facility fees and create new reporting requirements for hospital-owned or affiliated outpatient facilities. In addition, several facility reform bills remain pending in Massachusetts from 2023. These bills were recently referenced in a bill that, if enacted, would order the House Health Care Financing Committee to study the issues the bills raise and make recommendations by the end of the calendar year.
Looking Forward
States continue to consider additional reforms for addressing hospitals’ practice of charging facility fees for outpatient services. When sessions convene in 2025, we anticipate there will be more activity and continued interest on this issue. CHIR’s cheat sheet is a valuable resource for policymakers when considering different facility fee reform strategies. Policymakers and advocates considering facility fee reforms are encouraged to contact CHIR experts for technical assistance at FacilityFeeTA@georgetown.edu.