States take aim at outpatient facility fees driving higher commercial health costs

Editor's Note

States are sharpening their focus on outpatient facility fees, using new data and reporting mandates to expose how these charges inflate commercial healthcare spending, HealthAffairs October 6 reports. Specifically, Colorado, Maine, Connecticut, and Washington have launched varied but increasingly sophisticated efforts to monitor when and where hospitals bill facility fees for outpatient care, and to rein in their financial impact on patients and payers.

Facility fees are institutional charges added by hospital outpatient departments (HOPDs) to cover operational costs. When combined with professional service fees, they make the same service significantly more expensive than when provided in a physician’s office. As the article explains, opaque billing practices and incomplete claims data often hide these fees from both regulators and consumers. Hospital market power and ongoing consolidation have widened price gaps between hospital-affiliated and independent providers, intensifying scrutiny from states and insurers.

In Colorado, a 2023 law created a Hospital Facility Fee Steering Committee to study the prevalence and cost of these charges. Using the state’s All-Payer Claims Database, the committee found outpatient facility fee payments grew by 6.5% annually between 2017 and 2022. Yet data limitations prevented full comparison of total care costs between hospital and office settings.

Maine, which has banned facility fees for office visits since 2005, recently expanded transparency requirements through its All-Payer Claims Database. Public reporting drove notable improvements: between 2024 and 2025, the share of facilities billing illegal office-visit facility fees dropped from 33% to 9%. Despite reduced “split-billing” of both facility and professional fees, overall payments for common services still rose modestly.

Connecticut has gone further, prohibiting facility fees for most evaluation, management, and telehealth services while mandating detailed annual reports from hospitals. Between 2019 and 2023, off-campus facility fee revenue increased 42%, while commercial insurers paid up to 3.5 times more per visit than public payers. Washington’s reporting system, though less robust, revealed wide variation in facility fees, from under $200 to nearly $7,000 per visit.

State data efforts are beginning to shape policy discussions on affordability and transparency. Some states are considering “site-neutral” payment reforms to eliminate incentives that steer care toward higher-cost hospital settings. Others are exploring targeted fee prohibitions.

Collectively, these state initiatives signal a growing movement to curb excessive outpatient facility fees and rebalance pricing in the commercial healthcare market.