Since CMS codified through regulation a single price Medicare will pay for select services, regardless of whether they occur in a hospital outpatient department (HOPD) or an independent office, site neutral payments policies have been seen as an opportunity to bring down health care spending. Subsequent policies exempted most existing HOPDs from the policy, limiting the impact of that regulatory provision.
One reason a service may cost more in the HOPD than in an office visit is that, when people receive care in a hospital, they often receive two bills: one from the physician or clinical staff that provided the care, and one from the hospital. The bill from the hospital, called a “facility fee,” is meant to cover the expenses of running the hospital, including licensing, regulatory requirements, and general overhead costs. As hospital systems acquire independent offices, practices that used be only physician offices transition to become hospital outpatient facilities. As of September 2025, 20 states have passed legislation that either restrict facility fees, require advanced notice to the patient of facility fee bills, or collect data on facility fee billing practices. Federal legislation to regulate facility fees has also been proposed but has not yet been enacted.
In this analysis, we examined the prevalence of facility fee billing for and spending on Evaluation and Management (E&M) visits, which are most likely to capture office visits that could be provided outside of an HOPD (and may, at one time, have been). E&M visits are standard medical visits with a health care provider, with the purpose of diagnosing, treating and managing illnesses and injuries. These visits can range from 15 minutes to over an hour and a wide range of provider specialties provide and bill for these visits.
We stratified our results by state as well as provider specialty to understand which geographic areas are most impacted by facility fee billing and which provider specialties are driving national trends.
Prevalence of E&M Facility Fees Ranged from 0.25% to 5.38%
Figure 1 shows the prevalence of facility fees for E&M office visits by state. Nationally, the prevalence of facility fees for E&M visits was 1.24% in 2022. That means that 1.24% of E&M visits had an associated facility fee in that year. Sixteen states and DC had a prevalence above the national average while 27 states hac a lower prevalence. (Note that AL, HI, MT, ND, SD, VT and WY are excluded from this analysis). New Mexico, Wisconsin, and Nebraska had the highest prevalence of E&M facility fee billing, and Utah, Iowa and Virginia had the lowest.
One complication of facility fee billing is that there are a significant number of facility claims with a zero-dollar allowed amount. In other words, a claim was recorded, but there was no price associated with it. Interpreting what happened in these cases is challenging, but is likely one of a few scenarios: 1) the claim was denied and not paid for by insurance (which could leave the patient responsible for paying the facility fee), 2) the facility fee amount was attached to the claim header or to another service billed along with the E&M code (meaning the spending is not captured in our analysis, but still exists) or 3) the facility fee claim amount submitted was actually zero dollars. In any of these three scenarios, a facility fee claim was billed, so we counted it toward the state and national prevalence of facility fees. For additional context, we included the total spending on E&M facility fees and the proportion of E&M visits with a zero-dollar facility fee in the tool tip, which you can view when you hover over a state in the map.
Nationally, the prevalence of facility fees decreased slightly (-0.19 percentage points) from 2018 to 2022, and spending on facility fees decreased by roughly $121 million. The decrease was due to both a decrease in the proportion of E&M visits with a facility fee claim and an increase in the proportion of facility fees with a zero-dollar amount. Most states followed the same national pattern, though there were a few exceptions. Pennsylvania, Nebraska, Louisiana, DC and West Virginia all saw a slight increase in the prevalence of facility fee claims, though Pennsylvania and West Virginia also saw an increase in the proportion of facility fee claims that had a zero-dollar amount, while the proportion of zero-dollar facility fee claims in the other states stayed nearly the same.
14.32% of Radiology E&M Visits had a Facility Fee
Figure 2 shows the prevalence of E&M facility fees by provider specialty. Radiology and Transplant Surgery specialties have the highest prevalence of E&M facility fee billing (14.32% and 12.24% respectively). The highest total spending on E&M facility fees, however, is among Internal Medicine, Primary Care, and Nurse Practitioners. Total spending on facility fees is driven by both the proportion of claims billed and the volume of services rendered overall. For example, even though Primary Care providers have a lower rate of E&M facility fee billing at 0.59%, they provide over 33% of all E&M visits. This high volume overall results in over $65 million in facility fee spending.
Although the Radiology and Transplant Surgery specialties had the highest prevalence of facility fee billing, they also saw the largest decrease in prevalence from 2018 to 2022 (about 5 and 6 percentage points respectively). Most specialties saw a decrease in facility fee prevalence, with the exception of 6 specialties: Clinical Nurse Specialist, Colon & Rectal Surgery, Ophthalmology, Family Medicine, Optometrist, and Allergy & Immunology. These specialties all saw a slight increase in prevalence ranging from 0.01 to 0.52 percentage points.
Takeaways:
There is a relatively low prevalence of facility fee billing for E&M claims that occur in an office or outpatient setting, though there is some variation by state.
The national trend indicates an overall decrease in facility fee billing for E&M visits from 2018 to 2022.
Because E&M services are the most common ambulatory services and have such high volume, even a small proportion of claims with facility fees can add up to large amounts of spending.
Methods
This analysis includes ESI claims for evaluation and management (E&M) visits (CPT codes 99201-99205, 99211-99215, and 99241-99245) that occurred in 2018 and 2022 and were billed on a physician claim with place of service codes 11 (Office), 19 (Off-Campus Outpatient Hospital), or 22 (On-Campus Outpatient Hospital). Outpatient facility E&M claims that occurred for the same patient on the same day were matched with these encounters. We included encounters that had a $0 outpatient facility claim line for an E&M code. We restricted claims to those provided by a provider with an NPI listed in the National Plan & Provider Enumeration System (NPPES) dataset from CMS. We required providers in our dataset to have a known state to be included in the analysis. We weighted our dataset using ACS 5-year population estimates to ensure our prevalence and spending estimates were generalizable to the larger ESI population.
Acknowledgement: We would like to extend our appreciation to Cambia Health Solutions for their contributions to this project.