By Karen Davenport and Kennah Watts
Think about after a telehealth appointment you obtain a $60 cost, supposedly for a “specialty room.” Think about you go to your main care physician for a routine checkup and are billed a $1,000 “room payment.” Think about your “uneventful” outpatient biopsy ends in a $2,170 hospital payment. Think about after your physician’s workplace strikes up one flooring in a medical workplace constructing, supposedly to a “hospital-based setting,” your invoice will increase 10-fold.
These examples illustrate a every day actuality for sufferers throughout the USA. Latest traits in cost-sharing and insurance coverage profit design imply that buyers are more and more uncovered to facility charges. Not solely are these excessive and surprising fees disastrous for individuals’s pocketbooks, however worry of those charges have pushed some sufferers away from care. On this weblog, we discover how shoppers’ publicity to facility charges is expounded to current traits in well being supply and medical health insurance, and profile coverage reforms that some states have carried out to guard shoppers from these fees.
Background
When a affected person receives ambulatory medical companies in a hospital or hospital-affiliated setting, resembling a hospital outpatient division (HOPD) or a hospital-owned observe, the affected person and their insurer obtain two varieties of payments: the skilled invoice, which incorporates fees for the treating clinician’s time and bills, and the institutional invoice, which ostensibly covers the operational prices the ability incurs to supply care. These institutional fees are sometimes known as a “facility payment,” though they might seem on affected person payments as “clinic companies,” “room fees,” or “administrative charges,” amongst different phrases. In practically all states, suppliers can invoice these charges whether or not they ship care at an on- or off-campus location.
As hospitals and well being methods more and more purchase doctor workplaces and outpatient departments, a observe often known as vertical integration, facility charges have change into commonplace. When hospitals purchase doctor practices, the ambulatory companies as soon as supplied by an impartial observe usually change into, for billing functions, outpatient companies delivered in an off-campus HOPD. These practices can then invoice for each the clinician’s time and for the hospital’s overhead, although the affected person’s expertise extra intently resembles a doctor’s workplace than a hospital clinic.
Regardless of facility charges’ rising prevalence, information and transparency limitations make it difficult to quantify the amount, frequency, and whole fees related to facility payment billing. As of the 2025 legislative session, solely seven states require hospitals and different services to often report information associated to facility charges, and solely 4 states require services to determine the bodily location the place care was supplied on claims kinds.
Elements Driving Shopper Publicity to Facility Charges
Present traits in industrial medical health insurance design and pricing amplify shoppers’ publicity to facility charges, resembling elevated shopper out-of-pocket legal responsibility, underlying insurance coverage profit designs that expose shoppers to facility payment fees, and the expansion of gross industrial insurance coverage premiums.
Price-Sharing and Profit Design
Price-sharing and profit designs in industrial medical health insurance depart shoppers with important publicity to facility payment fees. Contemplating solely single protection for illustrative functions, 34 % of coated employees maintain employer-sponsored insurance coverage with a deductible of $2,000 or extra in 2025, and normal annual deductibles for in-network care in employer-sponsored medical health insurance presently common $1,663. That is 54 % larger than the typical deductible for single protection in 2015. For employees in small companies (institutions with between 10 and 199 employees), the one normal deductible is way larger, averaging $2,631. Deductibles for household protection are extra complicated, but in addition present important progress over time, with larger deductible quantities for employees in small companies. Deductibles for Market plans range considerably, however can exceed $7,000 for some single protection plans.
Whereas many insurance coverage designs apply solely copayments to doctor care earlier than the enrollee satisfies their deductible, sufferers usually should first meet their deductible after which pay relevant cost-sharing for hospital fees, together with facility charges associated to care they obtain at HOPDs. For instance, 67 % of coated employees even have post-deductible coinsurance, which averages 20 % of allowed fees for outpatient procedures; 13 % face post-deductible copayments for hospital fees, which common $186 per go to. These fees are separate from cost-sharing necessities for well being professionals’ companies. Consequently, shoppers might face each a copayment and a considerable hospital invoice for an outpatient go to. Lastly, in some circumstances shoppers’ insurance coverage don’t cowl facility charges for some hospital outpatient companies, leaving them completely accountable for these fees.
Different analysis signifies that precise out-of-pocket spending has additionally grown as shoppers’ out-of-pocket monetary publicity has elevated, with a lot of this progress concentrated within the outpatient atmosphere. For instance, shoppers’ expenditures for outpatient companies grew 34 % between 2013 and 2019, in comparison with roughly 2 % progress in out-of-pocket spending for inpatient care in the identical interval.
Costs and Premiums
Facility charges—and the vertical integration they incentivize—are additionally associated to rising spending for outpatient care and associated will increase in medical health insurance premiums. That is partly as a result of hospitals and well being methods can demand larger funds from industrial payers than impartial doctor workplaces are capable of command for a similar companies. As well as, vertical integration implies that extra clinicians cost these larger quantities, with industrial costs rising by 14.1 % extra for all companies supplied by acquired doctor practices in a single research. Different specialists estimate that facility charges signify 45 % or extra of post-integration adjustments in costs.
These worth will increase, in flip, drive will increase in medical health insurance premiums. For instance, an examination of Coated California, the state’s medical health insurance market, discovered that vertical integration in concentrated California markets was related to a 12 % enhance in market premiums. Whereas these findings are particular to the California market, vertical integration is prone to affect premiums in different insurance coverage markets as effectively, and when medical health insurance premiums enhance, enrollee spending on medical health insurance additionally grows. For instance, whereas the proportion of premiums employees should cowl out of wages has remained comparatively regular during the last decade, important premium will increase for employer-sponsored insurance coverage over this era imply that the quantity employees pay, on common, has grown by practically 32 % for single protection and 37 % for household protection since 2015. Customers are thus paying extra for well being protection that displays, partly, will increase in facility-fee-related funds for outpatient care.
Focused Reforms Can Systematically Safeguard Customers and Comprise Prices
Given the confusion round facility charges and the unpredictable out-of-pocket prices shoppers can encounter, many sufferers have turned to media for assist. Sadly, the sheer variety of questionable or surprising facility charges swamps the capability of dogged reporters and shopper advocates who acquire and convey these fees to gentle—which implies many shoppers find yourself paying an costly facility payment out-of-pocket or on a bank card, and even get despatched to collections. As a substitute, shoppers want systemic coverage reforms that defend them from expensive and unpredictable facility charges.
First, focused facility payment prohibitions can remove these payments in some eventualities. Bans on facility charges for routine workplace, clinic, and telehealth visits, in addition to preventive companies, have broad attraction. As of the 2025 legislative session, 9 states prohibit facility charges for some companies or settings. Connecticut, Indiana, and Maine have probably the most complete facility payment prohibitions and subsequently present sufferers with the strongest protections from facility payment fees. Connecticut prohibits hospitals from charging facility charges for on- and off-campus visits for analysis and administration companies. In Maine, hospitals can’t invoice facility charges for companies supplied in an workplace setting, no matter whether or not the workplace is on- or off-campus, whereas in Indiana, the biggest, non-profit hospitals within the state might not cost facility charges for office-based care supplied off-campus. Facility payment prohibitions within the different six states—Maryland, Mississippi, New York, Ohio, Texas, and Washington—apply to telehealth, preventative companies, or drive-through testing and vaccination companies.
Second, out-of-pocket protections can restrict shoppers’ monetary publicity to facility charges. These protections can regulate suppliers, resembling by prohibiting suppliers from steadiness billing shoppers for facility charges, and payers, for instance by prohibiting cost-sharing designs that embrace separate coinsurance for facility charges. At present solely two states, Colorado and Connecticut, have enacted legal guidelines with cost-sharing protections for facility charges. Colorado prohibits suppliers from steadiness billing sufferers for facility charges on preventive companies in outpatient settings. Connecticut’s protections goal each suppliers and payers. Insurers can’t require separate facility payment cost-sharing for outpatient companies supplied at an off-campus location, whereas suppliers can’t invoice a shopper who has not met their deductible an outpatient facility payment that exceeds the plan’s negotiated charge nor steadiness invoice a shopper for greater than their cost-sharing obligation. Suppliers additionally might not report a shopper’s failure to pay a facility payment invoice to a credit score reporting company when their insurer has “main duty” for fee.
Whereas facility payment prohibitions and cost-sharing protections are the simplest approaches to scale back shoppers’ out-of-pocket publicity to facility charges, a number of states have carried out different facility fee-related reforms, together with billing transparency, public reporting, and shopper notification necessities.
Takeaways
With the rising rise of vertical integration and the expansion in shoppers’ out-of-pocket duties, sufferers are extra uncovered to facility charges than ever. In response, some states have enacted focused facility payment prohibitions and out-of-pocket protections that protect shoppers from a minimum of a few of these charges, whereas a bigger variety of states have created shopper notification necessities that a minimum of be certain that sufferers know when to anticipate facility payment payments. As they search to enhance well being care affordability and entry for his or her shoppers, state policymakers might take into account these reforms, or examine site-neutral fee—one other strategy that additionally targets the site-dependent variations in fee charges that drive vertical integration and the proliferation of facility payment fees.