Patient Rights

Hospital Facility Fees Explained: Why Your Bill Has Two Charges

Hospital facility fees can double your bill. Understand outpatient facility fees, provider-based billing, and site-of-service differentials to save money.

Potential savings: $200-$5,000

Last verified: January 28, 2026Reviewed by a clinician with clinical informatics training

If you have ever received a medical bill with a mysterious facility fee on top of the doctor's charges, you are not alone. Hospital facility fees are separate charges that hospitals add for the use of their facilities, equipment, and overhead — and they are the fastest-growing hidden cost in American healthcare. These fees can be added even for a routine office visit if the clinic is owned by or affiliated with a hospital. A 2024 Health Affairs study found that hospital-owned physician offices charge 26% more than independent practices for the same services, with facility fees accounting for the majority of the difference. As hospital consolidation accelerates — over 40% of physician practices are now hospital-owned — more patients are being hit with these charges. Several states (Connecticut, Colorado, Maine, New York, and Indiana) have passed laws to limit or ban facility fees, but most Americans remain unprotected. Understanding facility fees is essential to avoiding surprise bills and saving hundreds to thousands of dollars.

What Is Hospital Facility Fees Explained?

A hospital facility fee is a charge for the overhead costs of providing care in a hospital or hospital-owned facility. When a hospital buys a physician practice, that office can become a hospital outpatient department (HOPD), allowing it to bill both a professional fee (the doctor's charge) and a facility fee. This is called provider-based billing. The same appointment with the same doctor can cost significantly more simply because the practice is now hospital-owned. For example, a basic office visit (CPT 99213) at an independent practice might cost $150 total, but the same visit at a hospital-owned office could cost $150 for the physician fee plus $250-$500 for the facility fee — doubling or tripling the bill. CMS has been enforcing hospital price transparency rules more aggressively in 2026, with penalties rising to $5,547 per day for non-compliant hospitals. These price transparency files now make it possible for patients to see facility fee charges before they walk through the door.

Common Billing Errors

Unexpected Outpatient Facility Fees

Save $200-$600

Being charged a facility fee for a visit to what appears to be a regular doctor's office but is technically a hospital outpatient department. Many patients do not realize their doctor's office has been acquired by a hospital and are surprised by the additional fee.

Facility fee $200-$600 added to office visit

Site-of-Service Differential

Save $500-$5,000

The same procedure billed at hospital outpatient rates instead of office-based rates. For example, a colonoscopy at a hospital outpatient facility can cost three times more than the same procedure at an ambulatory surgery center.

Place of Service 22 (hospital outpatient) vs 11 (office)

Facility Fee for Telehealth Visits

Save $100-$400

Some hospital systems charge a facility fee even for telehealth appointments conducted from your home. Since no hospital facility is being used, this fee is often inappropriate and can be disputed.

Multiple Facility Fees Same Visit

Save $200-$800

Being charged separate facility fees for different services during a single visit. For example, a facility fee for the office visit, another for a lab draw, and another for an X-ray, when a single facility fee should cover the entire visit.

Facility Fee After Practice Acquisition (No Notice)

Save $200-$600

Your doctor's independent practice was acquired by a hospital system, and you now receive facility fees without being told about the ownership change. Federal rules require 30-day advance written notice before charging new facility fees, but many hospitals fail to comply. If you were not notified, you have grounds to dispute the charge.

Facility Fee in a State That Restricts Them

Save $200-$1,000

Several states have passed laws limiting facility fees. Connecticut bans facility fees at off-campus hospital clinics. Colorado prohibits facility fees for preventive services and requires disclosure for others. Maine, New York, and Indiana have enacted similar restrictions. If you live in one of these states, check whether the facility fee on your bill is legally permitted.

How to Spot These Errors on Your Bill

1
Check the Place of Service code on your claim: code 22 means hospital outpatient (with facility fee), while code 11 means a physician office (no facility fee).
2
Look for a separate line item labeled facility fee, hospital outpatient fee, or clinic charge in addition to the physician fee.
3
Ask your doctor's office before your visit if they are a hospital-owned or hospital-affiliated practice. You can also search your doctor's address on CMS Care Compare to check if the location is registered as a hospital outpatient department.
4
Compare your bill against what you would pay for the same service at an independent physician office or ambulatory surgery center. Use your hospital's price transparency file (required by CMS) to look up the specific facility fee amounts.
5
Check if facility fees were charged for telehealth visits where no physical facility was used.
6
Look up whether your state has facility fee restrictions. Connecticut, Colorado, Maine, New York, and Indiana have laws that ban or limit certain facility fees — if you are in one of these states, the charge may not be allowed.
7
Call the billing department and say: 'I was charged a facility fee of $X. I was not notified about this fee before my visit. Please provide documentation that I received the required 30-day advance written notice of facility fees, or remove this charge.' Many hospitals will reduce or waive the fee rather than prove compliance.

Frequently Asked Questions

Are hospital facility fees legal?

Yes, facility fees are generally legal under current CMS rules. Hospitals that meet provider-based billing requirements can charge facility fees for services provided in hospital outpatient departments. However, several states have passed or are considering legislation to limit or require disclosure of facility fees. Patients should always be informed of facility fees before receiving care.

How can I avoid facility fees?

Choose independent physician practices or ambulatory surgery centers instead of hospital-owned facilities when possible. Before scheduling an appointment, ask if the location is a hospital outpatient department. For procedures like imaging or lab work, ask your doctor if the test can be done at an independent facility rather than the hospital.

Can I negotiate or dispute a facility fee?

You can dispute a facility fee if you were not informed about it before your visit. Many states require advance notice of facility fees. You can also appeal to your insurance company, especially if the fee seems excessive. For telehealth visits, facility fees are often successfully disputed since no physical facility was used. Start by requesting an itemized bill that breaks out the facility fee separately, then call billing and ask for documentation that you received the required 30-day advance written notice.

Can I refuse to pay a facility fee?

Simply refusing to pay can result in the bill going to collections. Instead, dispute the fee through the proper channels: request an itemized bill, file a billing dispute with the hospital, and appeal to your insurer. If you are in a state that restricts facility fees (Connecticut, Colorado, Maine, New York, or Indiana), cite the specific state law in your dispute. If the hospital cannot prove it gave you the required advance notice, you have strong grounds for removal of the charge.

How do I know if my doctor's office is hospital-owned?

Look for clues: a hospital logo on the building or paperwork, forms that reference a hospital system name, or a Place of Service code 22 on past claims. You can also search the provider's address on CMS Care Compare (medicare.gov/care-compare) to see if it is registered as a hospital outpatient department. Always ask directly before scheduling: 'Is this location a hospital outpatient department? Will I be charged a facility fee?'

What changed with facility fees in 2026?

CMS has dramatically increased enforcement of hospital price transparency rules in 2026, raising penalties to $5,547 per day for non-compliant hospitals. This means more hospitals are now publishing their facility fee rates in machine-readable files, making it possible for patients to compare costs before scheduling. Additionally, several states introduced new facility fee legislation in the 2025-2026 session. The combination of federal transparency enforcement and state-level bans is the strongest action against hidden facility fees in a decade.

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