Julia Burleson, Karen Davenport, Rachel Swindle, and Christine H. Monahan
Facility fees are charges billed by institutional health care providers, such as hospital outpatient departments (HOPDs), that are intended to cover the operational costs of maintaining the facility. When patients receive services in HOPDs, they typically generate two types of claims for a single visit: an institutional claim for the facility fees and a professional claim for the clinician’s services.
Some analyses have found that commercial insurers pay more when care is delivered in hospital outpatient settings than in physicians’ offices for the same service. Facility fees, combined with hospital market power, are a key driver of this price difference. However, limitations in claims data can obscure when and where outpatient facility fees are charged, which services they are attached to, and their contribution to overall health care spending. Institutional claims often include addresses or National Provider Identifiers (NPIs) for the broader health system or flagship hospital rather than the actual site of care. Analysts thus may not be able to identify which hospital locations are billing outpatient facility fees or how much revenue they are generating from these fees. Without common identifiers across claims forms, analysts may also struggle to link facility fee and professional fees charged for the same service or visit. These inconsistencies, coupled with a lack of consistent public visibility into self-funded employer plan claims more generally, inhibit policymakers from readily assessing the full scope of outpatient facility fees in the commercial market.
In response, some states—including Colorado, Maine, Connecticut, and Washington—have collected and analyzed data on outpatient facility fee billing within their borders. This growing interest reflects several converging trends. Hospital outpatient utilization has increased substantially over the past few decades, and care delivered in HOPDs has generally become more expensive compared to similar care provided in non-hospital settings. Provider consolidation has widened these price gaps by increasing hospitals’ negotiating power in commercial markets through physician practice acquisitions. At the same time, growth in health plan deductibles (in amount and prevalence) over the past decade and changes to other aspects of insurance plan benefit designs have increased the visibility of facility fees’ financial impact to patients and policymakers alike.
Below, we explore states’ efforts and highlight key findings for the commercial market from state reports. Due to differences in state definitions and reporting requirements for facility fees, findings are not always directly comparable across states. Nonetheless, these reports provide valuable insights into facility fee billing and regulations in different states.
Colorado
In 2023, Colorado established the Hospital Facility Fee Steering Committee in response to growing concerns about the price and prevalence of outpatient facility fees. While the bill did not create annual reporting requirements, it tasked the committee with evaluating the impact of hospital facility fees in Colorado and reporting its findings to the legislature. The committee included consumer advocates and health industry representatives and provided multiple opportunities for public input.
The committee’s analysis relied heavily on data from the state All-Payer Claims Database (APCD), which includes 74 percent of covered lives in Colorado from 2017 to 2022 but only about 25 percent of lives covered by Employee Retirement Income Security Act-regulated self-funded employee health plans.
Key Findings from Commercial Market Data
- Outpatient Facility Fee Billing Permitted: Colorado does not impose limitations on facility fees, including for routine services such as evaluation and management (E&M) or clinic visits. (Hospitals can’t balance bill patients for facility fees for preventive care, however.)
- Growth in Outpatient Facility Fee Payments: Between 2017 and 2022, total outpatient facility fee reimbursement increased by an average of 6.5 percent per year.
- Similar Professional Fee Payments Regardless of Setting: For the 25 most frequently billed CPT codes with the highest reimbursement amounts, the average professional fee paid to hospital-affiliated providers and independent providers was nearly the same ($71.41 versus $69.60, respectively). However, the committee was not able to estimate the total cost of care for services delivered in HOPDs (professional plus facility fees) due to data constraints. Episodes of care often involve multiple procedures performed by different providers who bill separately, and variations in billing practices create challenges in compiling and comparing total costs. As a result, direct comparisons between the total cost of care delivered in HOPD versus office settings are not possible using the data in this report.
The committee report acknowledges a few other important limitations as well. Although Colorado law requires off-campus hospital clinics to register for unique National Provider Identifiers (NPIs), commercial claims data often still reflect the main hospital or health system rather than the specific clinic where providers rendered services. In addition, low response rates from key stakeholders, including payers, employers, and hospitals, hindered the committee’s efforts to validate APCD findings.
Maine
In 2005, Maine enacted a facility fee prohibition for office visits, regardless of whether that office is physically located in a hospital facility. However, hospitals may charge such fees for other kinds of care received in HOPDs, including radiology and imaging services, behavioral health care, and procedures such as colonoscopies.
In 2023, the state passed a facility fee transparency law requiring the state APCD to publish annual reports on commercial outpatient facility fee payments. The APCD, which has claims data for approximately 73 percent of commercially insured residents in the state, released its first report in 2024 and the data for its second report in early 2025.
Key Findings from Commercial Market Data
- Initial Non-Compliance Observed: The first report identified ongoing facility fee charges for office visits, which it interpreted as E&M services and preventive care, despite the statutory prohibition.
- Improved Compliance with Public Spotlight: In the first report, 33 percent of facilities (49 out of 148) that billed for office visits also billed a facility fee at least once. By the 2025 report, this figure dropped to 9 percent of facilities (16 out of 186).
- Decreased Split-Billing while Median Payment Amounts Remain Level: The number of care episodes that included both a facility fee and a professional fee declined by 16 percent between the two reports. This decline was largely driven by a 22 percent drop in split-billing across three routine E&M codes for established patients. Despite this drop in split-billing, median total payments increased by an average of about $8 across the three codes. Notably, the report does not indicate the percentage of claims billed as institutional versus professional.
Connecticut
Since 2015, Connecticut has required hospitals and health systems to report detailed outpatient facility fee data, including total outpatient facility fee charges, total number of visits with facility fees by payer, and charges for the top ten procedures with outpatient facility fees by revenue and utilization. For commercially insured and uninsured patients, the state initially prohibited facility fees for outpatient services billed with E&M codes at off-campus facilities, except for emergency department visits and certain observation stays, extending the prohibition to assessment and management (A&M) codes in October 2022 and on-campus facilities in July 2024. (Certain contracts were grandfathered for a period of time.) The state also banned facility fees for telehealth services.
In 2023, the state published reports with facility fee trends for off-campus HOPDs over a five-year period and for on-campus HOPDs over a one-year period. They also publish presentations with additional information not included in the reports.
Key Findings from Commercial Market Data
- Facility Fee Revenue Increased Significantly for Off- and On-Campus HOPDs: From 2019 to 2023, total off-campus HOPD facility fee revenue rose 42 percent, from $430 million to $611 million, and patient visits involving facility fees increased 12.8 percent, from 1.22 million to 1.38 million. For on-campus HOPDs, from 2022 to 2023, total facility fee revenue increased 10.3 percent, from $1.26 billion to $1.39 billion, and patient visits with facility fees grew 5.4 percent, from 1.68 million to 1.77 million.
- Higher Facility Fees per Visit for Commercial Insurers: On average, commercial insurance paid 2.5 to 3.5 times more in facility fees per visit at on- and off-campus HOPDs than any other payer, including Medicare and Medicaid.
The reports and presentations do not include average facility fee amounts by CPT codes, limiting the ability to compare facility fee differences for individual procedures across Medicare, Medicaid, and commercial insurers. Hospitals and hospital systems are required to report data every year, and their filings are publicly available in the Notifications and Filings database.
Washington
Beginning in 2012, Washington State required hospitals with provider-based clinics providing diagnostic and therapeutic services to include a separate form for outpatient facility fee data in their year-end financial reports to the Department of Health. Under this statute, hospitals must report—per provider-based clinic—the number of patient visits, outpatient facility fee revenue, and outpatient facility fee allowed amounts by payer type. However, the current reporting structure aggregates this information by hospital, preventing meaningful analysis of data at the individual clinic level. As a result, it is not possible to link facility fees to specific services or determine their impact on patient out-of-pocket costs and overall health care spending. Despite this limitation, the data reveal considerable variation in outpatient facility fee billing practices in the commercial sector across hospital systems. For instance, in 2024, one hospital system reported a maximum outpatient facility fee of more than $6,900 for a single patient visit, while others reported maximum charges of less than $200.
For the foreseeable future, Washington will continue to collect yearly outpatient facility fee reports from hospitals. However, the Department of Health is not responsible for analyzing the submitted data and lacks the authority to meaningfully enforce compliance.
Looking Forward
Despite variation in policy design and data analysis, a consistent narrative emerges across states: Outpatient facility fees are a growing concern for individuals with commercial insurance. States are beginning to use claims and hospital-reported data to identify patterns of excessive or inappropriate facility fee billing in hospital outpatient settings.
By quantifying the growth and distribution of outpatient facility fees, state reports provide a foundation for policies and market responses aimed at curbing them. In Connecticut, robust data collection effort enabled policymakers to identify and close gaps in their law, including narrowing the grandfathering provision and extending the prohibition to A&M codes and on-campus facilities. In Maine, public reporting and increased regulator attention to outpatient facility fees helped prompt greater compliance with existing laws over time. Some insurers and employer-purchasers may also use these findings to renegotiate contracts or adjust network designs, while consumers with transparent information could potentially avoid facilities charging high facility fees. However, the effectiveness of transparency alone in addressing excessive or inappropriate facility fee billing will depend on local market dynamics, including the relative power of hospitals, insurers, and state agencies.
State data also provide a launchpad for more states to directly address affordability concerns through substantive evidence-based facility fee reforms. By highlighting price differences between care settings for services that can be safely and appropriately delivered outside of hospitals, these data can help guide targeted policy interventions. One option is site-neutral payment reform, which eliminates incentives to shift care to higher-cost hospital departments by capping total reimbursement for certain services to no more than the amount paid to freestanding settings such as physician offices or ambulatory surgical centers. A less aggressive alternative is to prohibit outpatient facility fees for specified services or settings, without regulating prices. While this policy may prompt hospital-affiliated providers to increase professional fees to offset lost revenue—as may have occurred in Maine—it can still offer consumers meaningful out-of-pocket protections. With either type of reform, better data would help policymakers determine which settings and services to target and what, if any, exceptions should apply.
As more states confront rising commercial health care costs, the experiences of Colorado, Connecticut, Maine, and Washington offer valuable lessons on how data can identify high-cost billing practices and help shape health care affordability reforms.
Julia Burleson, Karen Davenport, Rachel Swindle, and Christine H. Monahan “State Efforts To Monitor Outpatient Facility Fees” October 6, 2025, https://www-healthaffairs-org.proxy.library.georgetown.edu/content/forefront/state-efforts-monitor-outpatient-facility-fees. Copyright © 2025 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.