You see one doctor for 15 minutes and get two bills. The doctor’s charge is $150. Then a second bill arrives from the hospital for $600–$1,200 — a “facility fee” you never knew existed. This happens to millions of Americans every year. As hospitals have acquired physician practices at record pace, facility fees now appear on bills for routine checkups, follow-up visits, and even telehealth calls. The average facility fee adds $350–$1,500 to an outpatient visit, and most patients have no idea it’s coming until the bill arrives.
1. What is a facility fee?
A facility fee is a separate charge that a hospital bills for using its outpatient space, equipment, and support staff. It appears in addition to the professional fee your doctor charges for the actual clinical service. When you visit a doctor whose office is owned by a hospital system, you may receive two bills for a single visit:
| Fee Type | Who Bills It | What It Covers | Typical Range |
|---|---|---|---|
| Professional fee | Your doctor | The physician’s clinical evaluation, diagnosis, and treatment plan | $100–$350 |
| Facility fee | The hospital | Building overhead, nursing support, equipment, 24/7 readiness, compliance costs | $350–$1,500 |
At an independent, freestanding doctor’s office, you pay one bill that covers everything. At a hospital-owned outpatient office, the same visit generates two bills — and the total is almost always higher. A 2023 MedPAC report to Congress found that hospital outpatient departments charge two to three times more than independent physician offices for the same services.
2. Why facility fees exist
Facility fees were originally designed for hospital-based settings like emergency departments and outpatient surgery centers, where the hospital genuinely maintains expensive infrastructure — operating rooms, imaging equipment, ICU beds, and round-the-clock nursing. In those settings, a facility fee pays for overhead that an independent doctor’s office doesn’t have.
The problem arose as hospitals began acquiring private physician practices at scale. Between 2012 and 2024, the share of physicians employed by hospitals or health systems rose from 25% to over 52%, according to Physicians Advocacy Institute data. When a hospital acquires an independent cardiology practice, it can reclassify the office as a hospital outpatient department (HOPD) and begin billing facility fees on every visit — even if nothing about the office changes.
Hospital outpatient department vs. independent office
| Feature | Independent Office | Hospital Outpatient Department (HOPD) |
|---|---|---|
| Billing structure | One bill (professional fee only) | Two bills (professional fee + facility fee) |
| Typical cost for a Level 3 E/M visit (CPT 99213) | $130–$180 | $350–$650 (combined) |
| Medicare reimbursement (CPT 99213) | ~$112 (total) | ~$81 (professional) + ~$115 (facility) = ~$196 |
| Patient cost-sharing | One copay or coinsurance | Copay + separate facility coinsurance |
| Equipment on site | Basic exam room | Often the same basic exam room |
The financial incentive is clear. By reclassifying a physician office as a hospital outpatient department, the hospital can collect 40–80% more for the identical visit. Medicare recognized this problem and in 2015 began restricting facility fee billing for newly acquired off-campus provider-based departments (Section 603 of the Bipartisan Budget Act). But offices acquired before November 2, 2015 were grandfathered in, and enforcement gaps remain.
3. When facility fees are legal vs. questionable
Not all facility fees are equal. Some are fully justified; others exploit a billing loophole that was never intended for routine office visits.
When facility fees are clearly appropriate
- Emergency departments — ERs maintain 24/7 trauma readiness, advanced imaging, and critical care teams. Facility fees here reflect genuine overhead.
- Hospital outpatient surgery centers — Operating rooms, anesthesia equipment, and post-surgical recovery units require significant infrastructure.
- On-campus hospital clinics — Clinics located within or immediately adjacent to the hospital building, sharing hospital resources and staff.
- Infusion centers and radiation therapy — Facilities that require expensive specialized equipment and clinical monitoring.
When facility fees are questionable
- Off-campus doctor’s offices acquired by a hospital — The office is miles from the hospital campus, uses the same exam rooms and staff as before the acquisition, and provides no hospital-level services. Yet patients now pay a facility fee.
- Telehealth visits billed with a facility fee — Some hospital systems have billed facility fees for video visits where no physical facility was used at all. CMS has flagged this practice.
- Routine preventive care — Annual physicals and wellness visits at a hospital-owned primary care office that functions identically to an independent practice.
- Provider-based departments that don’t meet CMS attestation requirements — To bill facility fees, a hospital must attest that the off-campus location meets specific operational, financial, and clinical integration standards. Not all do.
4. Real bill example: a cardiology visit with a facility fee
Here’s what a follow-up cardiology visit looks like when it’s billed through a hospital outpatient department vs. what the same visit would cost at an independent cardiologist’s office.
What the same visit would cost at an independent cardiologist’s office:
- 99214 office visit: $220–$280 (one bill, no facility fee)
- 93000 ECG: $50–$150 (one charge, no separate facility component)
- Total: $270–$430
The hospital-based visit costs $1,622 for the same clinical service that costs $270–$430 at a freestanding office — a 278–500% markup driven entirely by facility fee billing.
5. How to avoid or reduce facility fees
a) Ask before you book
Before scheduling any appointment, call the office and ask: “Is this location classified as a hospital outpatient department? Will I be billed a facility fee?” If the answer is yes, ask whether the same doctor sees patients at a non-hospital-affiliated location. Many physicians who are employed by hospital systems also have privileges at independent offices or ambulatory surgery centers.
b) Choose freestanding, independent offices
Independent physician offices, freestanding imaging centers, and ambulatory surgery centers do not bill facility fees. For routine visits, labs, imaging, and minor procedures, these locations are almost always cheaper. A knee MRI at a freestanding imaging center may cost $400–$700; the same MRI at a hospital outpatient department can cost $2,000–$4,500 after the facility fee is added.
c) Check provider-based status on your insurer’s website
Many insurance company provider directories now indicate whether a location is classified as a hospital outpatient department. Look for labels like “hospital-based,” “provider-based,” or “outpatient department.” If you can’t tell from the directory, call the insurer’s member services line and ask directly.
d) Request a Good Faith Estimate
Under the No Surprises Act, you have the right to request a Good Faith Estimate from any provider before a scheduled service. This estimate must itemize all expected charges, including facility fees. If you are uninsured or plan to self-pay, the provider is required to give you this estimate without you asking. Use it to compare costs between hospital-based and freestanding locations.
e) Negotiate or request a self-pay rate
If you’ve already received care at a hospital outpatient department, ask the billing department for a self-pay or prompt-pay discount on the facility fee. Many hospitals will reduce facility fees by 20–50% for patients who ask. Compare the facility fee on your bill against the Medicare rate using our calculator — if the hospital is charging 3–5x the Medicare rate, you have strong negotiating leverage.
Check your hospital’s pricing and financial assistance policies in our hospital directory.
6. What the No Surprises Act says about facility fees
The No Surprises Act (effective January 1, 2022) does not ban facility fees. However, it created two important protections that apply directly to facility fee billing:
Good Faith Estimate requirement
Hospitals and providers must give uninsured and self-pay patients a written Good Faith Estimate of all expected charges — including facility fees — before any scheduled service. The estimate must be provided within one business day for services scheduled 3–9 days in advance, and within three business days for services scheduled 10 or more days out.
Patient-provider dispute resolution
If your final bill exceeds the Good Faith Estimate by $400 or more, you can initiate the patient-provider dispute resolution process through the Department of Health and Human Services. This is a formal process with a 30-day resolution timeline. A surprise facility fee that wasn’t included in your Good Faith Estimate is exactly the kind of charge this process was designed for.
What the No Surprises Act does NOT do
- It does not cap or regulate the amount of facility fees.
- It does not require hospitals to disclose facility fees to insured patients before visits (only uninsured/self-pay).
- It does not ban the practice of billing facility fees at off-campus provider-based departments.
- It does not apply retroactively to facility fees billed before January 2022.
7. How to dispute a facility fee
Disputing a facility fee is straightforward if you follow these four steps. Most successful disputes are resolved at Step 2 or 3 without formal escalation. For a full walkthrough with letter templates, see our guide to disputing a medical bill.
Step 1 — Request an itemized bill. Call the hospital billing department and request a complete itemized statement with CPT codes, dates of service, and a breakdown of each charge. Look specifically for duplicate facility charges (the same CPT code billed once as a professional fee and again as a facility fee, which is expected, but also a third charge for facility overhead on ancillary services like labs or ECGs that may already be included).
Step 2 — Compare against Medicare rates. Use the BillKarma calculator to look up the Medicare facility rate for each CPT code on your bill. If the hospital’s facility fee is more than 3x the Medicare facility rate, document the gap. This comparison gives you concrete numbers to cite in your dispute. For example, if Medicare pays $134 for a 99214 facility fee and the hospital charged $782, you can point to a 483% markup.
Step 3 — Submit a written dispute. Write a letter to the hospital billing department stating:
- The specific line items you are disputing (CPT code, date, charged amount)
- The Medicare facility rate for each disputed charge
- Whether you were notified about the facility fee before the visit
- Your requested resolution (removal of the facility fee, reduction to a reasonable amount, or application of the self-pay discount)
Send the letter by certified mail and keep a copy. CC your insurance company if you have one.
Step 4 — Escalate if needed. If the hospital does not respond within 30 days or denies your dispute, you have several escalation options:
- File a complaint with your state attorney general’s office (consumer protection division)
- File a complaint with your state insurance commissioner
- If uninsured, initiate the No Surprises Act patient-provider dispute resolution process
- Contact the hospital’s patient advocate or ombudsman
- Report the billing practice to CMS if you believe the hospital does not meet provider-based billing requirements
Facility fee removed after pre-visit disclosure failure
A 45-year-old patient in Connecticut visited a dermatologist for a routine skin check. The office had been acquired by a hospital system six months earlier. She received a $180 professional fee from the dermatologist and a $540 facility fee from the hospital — for a 10-minute visit in the same office she’d visited for years as an independent practice.
Connecticut law requires hospitals to provide written notice of facility fees before a scheduled outpatient visit. The patient had received no notice. She submitted a written dispute citing the state law, and the hospital waived the $540 facility fee entirely. Savings: $540.
Facility fee reduced by 60% using Medicare comparison
A 62-year-old man in Texas received a $925 facility fee for a follow-up visit with his pulmonologist at a hospital-owned clinic (CPT 99213, Level 3 established patient visit). The Medicare facility rate for 99213 is approximately $115. He called the billing department, cited the Medicare rate, and asked for a “fair rate adjustment.” The hospital reduced the facility fee to $370, a 60% reduction. Savings: $555.
Frequently asked questions
What is a facility fee at a hospital?
A facility fee is a separate charge billed by the hospital for overhead costs like equipment, nursing staff, building maintenance, and 24/7 readiness. It appears on your bill in addition to the professional fee your doctor charges. Facility fees typically range from $350 to $1,500 for outpatient visits and can exceed $3,000 for procedures. You are most likely to encounter a facility fee when your doctor’s office is owned by or affiliated with a hospital system.
Why am I being billed twice for one doctor visit?
When your doctor’s office is classified as a hospital outpatient department (HOPD), the hospital bills a facility fee for overhead and the doctor bills a separate professional fee for the clinical service. This two-bill structure is legal under Medicare rules for provider-based departments, but many patients don’t know about it until the second bill arrives. The combined total is typically 2–3x what the same visit costs at an independent office.
Are facility fees legal?
Yes, facility fees are legal when billed by a hospital outpatient department that meets CMS provider-based billing requirements. However, facility fees become questionable when a hospital acquires a physician practice, changes nothing about the office, and begins adding facility fees to every visit. Several states — including Colorado, Connecticut, Indiana, Maine, and Ohio — have passed laws restricting or requiring disclosure of facility fees.
How can I avoid paying a facility fee?
The most reliable way is to choose a freestanding, independent doctor’s office that is not owned by a hospital. Before booking, ask: “Is this location classified as a hospital outpatient department?” If yes, ask if the same doctor practices at a non-hospital-affiliated location. You can also check your insurer’s provider directory, which often labels hospital-based locations.
Can I dispute a facility fee on my medical bill?
Yes. You can dispute a facility fee if the hospital failed to notify you in advance, if the fee appears on a telehealth bill, if the amount significantly exceeds the Medicare benchmark, or if you weren’t told the office was a hospital outpatient department. Request an itemized bill, compare the facility fee against the Medicare rate using our calculator, and submit a written dispute to the hospital billing department.
Does the No Surprises Act cover facility fees?
The No Surprises Act does not ban facility fees, but it requires providers to give uninsured or self-pay patients a Good Faith Estimate that must include facility fees. If your final bill exceeds the estimate by $400 or more, you can initiate the federal patient-provider dispute resolution process. This is a powerful tool for challenging surprise facility fees that weren’t disclosed upfront.
Sources
- MedPAC — March 2023 Report to Congress: Medicare Payment Policy (Chapter on Hospital Outpatient Payment)
- CMS — Hospital Outpatient Prospective Payment System (OPPS) Overview and Rate Tables
- Kaiser Family Foundation — Understanding Facility Fees in Health Care
- CMS — No Surprises Act: Good Faith Estimate and Patient-Provider Dispute Resolution
- Health Affairs — Hospital Acquisition of Physician Practices and the Impact on Pricing
- Physicians Advocacy Institute — Physician Employment Trends and Hospital Consolidation Data