By: Christine Monahan, Karen Davenport, Rachel Swindle, and Hanan Rakine

Consumers are increasingly being exposed to a new expense when they seek outpatient medical care: hospital facility fees. These fees can add hundreds or thousands of dollars to charges for a single service. In a new report and issue brief supported by West Health, CHIR researchers explore outpatient facility fee billing in the commercial sector, including the impact of these fees on consumers and how states are responding.

Researchers analyzed current laws in 11 study states and conducted more than 40 qualitative interviews with stakeholders, policymakers, and other on-the-ground experts. The report finds that as hospitals and health systems increasingly acquire ambulatory care settings, they frequently bill facility fees for routine services historically provided at much lower costs in independent physician offices and other outpatient settings. Consumers are bearing the brunt of these cost differentials through higher out-of-pocket spending and premium increases. This can be particularly jarring for consumers who, having experienced no change in care from one visit to the next, suddenly face a new facility fee charge because a hospital acquired their provider or clinic.

CHIR’s research also describes how the study states are tackling these problems and identifies challenges and opportunities for policymakers. Although even the most modest reforms face fierce hospital industry opposition, state reform efforts have enjoyed bipartisan support from lawmakers as well as a growing chorus of consumer and patient advocates and business coalitions. Some states explicitly prohibit facility fee billing for specific settings or services. Other states ensure some financial protection by limiting cost sharing or prohibiting balance billing for certain facility fees. And states are also promoting greater financial transparency through hospital reporting requirements. Due to difficulties determining where care was provided from claims data—a barrier for both policymakers pushing for reforms and researchers studying the issue—states have begun increasing transparency regarding the site of service as well.

You can read the full report and issue brief here.