By the VerifyDoc team
If your doctor's office was acquired by a hospital or health system, you may now owe two separate charges for the same visit — a professional fee for the doctor and a facility fee for the "room" — even if nothing else about your appointment changed.
This post explains what facility fees are, why hospital-owned practices can charge them, what federal rules govern disclosure and limits in 2026, and exactly how to check your bill for errors or excess charges you can dispute.
Have your itemized bill handy? VerifyDoc reads it line by line and flags duplicates, upcoding, unbundling and math errors. The flag count is free; the full report, with a dispute letter for each finding, is $19.
Check my bill — free preview →What exactly is a facility fee, and why is your doctor's office now charging one?
A facility fee is a charge billed separately from your doctor's professional fee. It's meant to cover a hospital's overhead: staffing, equipment, the physical space, and administrative infrastructure. Traditionally, it appeared only on true hospital bills — inpatient stays and emergency department visits. The problem is that facility fees have become a bigger problem recently because more hospitals are buying or becoming affiliated with doctor's offices and outpatient clinics, and when a clinic becomes hospital-owned, even routine visits are billed as if they take place in a hospital, triggering extra facility fees.
Facility fees are intended to help hospitals offset their high overhead costs, including overnight care and specialized equipment. But when hospitals acquire independent physician clinics that don't face hospital-scale expenses, patients may still be hit with those charges even in outpatient settings. The result: you receive two bills — one for the doctor (the professional fee) and a separate one for the "room" (the facility fee) — and for a simple 15-minute checkup, this facility fee often ranges from $150 to $300.
The legal mechanism behind this is called "provider-based status." Facilities that have provider-based status can bill both an outpatient professional and facility charge, while facilities that do not have provider-based status can only bill a professional charge. This status is governed by 42 CFR § 413.65, which sets the requirements a facility must meet before CMS recognizes it as part of a hospital for billing purposes.
How common is this, and what does the research say about costs?
Once a physician's office has been purchased by a hospital, that hospital has historically been able to obtain higher Medicare rates by billing as a hospital outpatient department for services at that physician's location. This practice has grown substantially alongside health system consolidation. Facility fees not only result in higher prices in the near term, but they also create financial incentives for hospitals to acquire physician practices — and increased integration between hospitals and physician groups has generally led to higher prices for patients, employers, and insurers without improvements in care.
According to January 2025 data cited by the Department of Health and Human Services, hospitals' acquisition of physician practices (vertical integration) can lead to a 14% average increase in prices for physicians' services. And hospital outpatient utilization has increased substantially over the past few decades, and care delivered in hospital outpatient departments has generally become more expensive compared to similar care provided in non-hospital settings, with provider consolidation widening these price gaps by increasing hospitals' negotiating power through physician practice acquisitions.
For procedures, the cost difference can be striking. According to Medicare's Procedure Price Lookup, one common knee arthroscopy carries an average patient cost of approximately $434 at an ambulatory surgical center and $774 at a hospital outpatient department in 2026 — the setting alone creates a difference of roughly $340 for someone without supplemental coverage. Reviewing your itemized bill carefully — as explained in our guide on how to read every line of an itemized hospital bill — is the first step toward catching these differences.
What does federal law require hospitals to tell you in 2026?
There are two distinct federal disclosure frameworks depending on your coverage type and the physical location of the clinic.
For Medicare patients at off-campus locations: Under 42 CFR § 413.65(g)(7), when a Medicare beneficiary is treated in a hospital outpatient department that is not located on the main provider's campus and the beneficiary will incur a coinsurance liability for an outpatient visit to the hospital as well as for the physician service, the hospital must provide written notice to the beneficiary before the delivery of services. That notice must explain that the site bills as a hospital outpatient department, meaning you'll owe both a facility and a professional copayment. Hospital outpatient departments must treat all Medicare patients, for billing purposes, as hospital outpatients, and cannot treat some Medicare patients as hospital outpatients and others as physician office patients.
For uninsured and self-pay patients: If you are uninsured or choose not to use your insurance, the No Surprises Act requires providers and facilities to give you a good faith estimate of expected charges before your appointment, including an itemized list of all items and services reasonably expected for your care, along with expected charges, diagnosis codes, and the name and location of each provider involved — and this estimate should include facility fees. The specific regulation is 45 CFR § 149.610, which governs the Good Faith Estimate requirement.
While federal law sets the basic rules, some states have passed additional laws to strengthen protections and provide state-level enforcement. States including Colorado, Maine, Connecticut, and Washington have taken steps to monitor and limit outpatient facility fees. If you receive a facility fee bill without any prior written notice — and you're in a state with disclosure requirements — that alone may be grounds to dispute the charge. You can also use our resource on how to dispute phantom and unexpected charges on your hospital bill if a fee appears with no corresponding disclosure.
What changed in 2026? The site-neutral payment expansion explained
Both Congress and the Department of Health and Human Services have made policy changes over the past several years to lower costs for off-campus hospital outpatient clinics to bring them in line with physicians' offices, despite industry opposition. The most significant 2026 development comes from the CY 2026 Hospital Outpatient Prospective Payment System (OPPS) Final Rule, released by CMS on November 21, 2025.
The CY 2026 OPPS and ASC Final Rule extended the site-neutral payment policy to drug administration services — the work of giving infusions and injections such as chemotherapy and immunotherapy — in excepted off-campus hospital outpatient departments (rural sole community hospitals are exempt), paying them at the Physician Fee Schedule-equivalent rate beginning January 1, 2026. In practical terms, drug administration services in off-campus grandfathered ("excepted") provider-based outpatient departments are now paid at the PFS-equivalent rate, which is roughly 40% of the OPPS rate.
CMS estimated the change would reduce OPPS spending by about $290 million in 2026, including about $220 million in Medicare savings and about $70 million in beneficiary savings from lower coinsurance. However, most off-campus hospital departments that began billing after November 2, 2015 already receive lower, physician-fee-schedule-equivalent payments, while older departments can qualify as "excepted" or grandfathered locations that historically billed at the higher OPPS rate — and it's those grandfathered locations that the 2026 rule now brings partially into line for drug administration services. On-campus provider-based departments remain an area to watch closely in future rulemaking.
CMS did not extend site-neutral payment to on-campus clinic visits or to imaging in off-campus excepted departments in 2026 , so those charges remain at the higher OPPS rate. If your visits involve imaging or routine clinic appointments at a hospital-owned on-campus location, you're still subject to the full facility fee structure. Understanding whether a charge is proper or inflated sometimes requires checking for upcoding — how hospitals inflate your bill by assigning higher-intensity billing codes than the visit warranted.
How to identify a facility fee error or improper charge on your bill
Not every facility fee is wrong, but several patterns signal a charge worth questioning. The table below maps the most common billing error types in hospital-owned practice settings and how to spot each one.
| Error Type | What It Looks Like on Your Bill | How to Check It |
|---|---|---|
| No advance written notice given | Facility fee appears with no prior disclosure document in your records | Request your intake paperwork; Medicare patients at off-campus sites are owed written notice under 42 CFR § 413.65(g)(7) |
| Facility fee on a telehealth visit from home | Line item labeled "facility fee" or "room charge" on a virtual visit | Per 42 CFR § 414.65, only the originating site can bill a facility fee — and Medicare pays none when that site is your home |
| Off-campus site billing at OPPS rate post-2015 | Facility fee billed at the full hospital outpatient rate for a clinic opened after Nov. 2, 2015 | Ask when the site began billing Medicare; Medicare pays non-excepted off-campus departments (claims marked with modifier PN) at the PFS-equivalent rate |
| Facility fee without actual facility services | "Room fee" or "hospital outpatient visit" on a bill for a phone call or portal message | Compare the CPT codes billed to the service you actually received; telehealth codes 99421–99423 should not carry a facility fee from your home |
| Duplicate facility + professional charge at wrong rate | Both a facility fee and a physician fee appear, but the physician fee is billed at the non-facility (office) rate | The physician fee should use the lower facility-setting rate (Place of Service 22 or 19) when a facility fee is also charged — dual billing at the higher rate is an overpayment |
| Level mismatch (overcoded facility visit) | Facility fee coded as a Level 4 or 5 visit for a routine follow-up | Request the itemized bill with CPT and revenue codes; compare the documented complexity level to your actual visit notes |
When you spot a discrepancy, start by requesting a fully itemized bill with CPT codes, revenue codes, and the Place of Service (POS) code. A POS code of 11 (office) means no facility fee should appear. A POS code of 19 (off-campus outpatient hospital) or 22 (on-campus outpatient hospital) confirms the site billed as a hospital department — and the professional fee should correspondingly be at the lower facility rate. If both charges appear but the POS is 11, that's a billing contradiction worth escalating.
Should you dispute, negotiate, or accept the charge? A decision guide
Once you've identified a potential facility fee problem, the right next step depends on what kind of error you're dealing with. Use the flowchart below as a starting point.
If the fee looks valid but the dollar amount is high, you have options beyond a formal dispute. Nonprofit hospitals are required by federal tax law to have financial assistance policies. Our guide on uninsured patient discounts and charity care covers how to apply even if you have insurance but face an unaffordable bill. If your insurer denies or underpays the claim, you can file an internal appeal with your plan and then request an independent external review. The federal independent dispute resolution process is only for disputes between providers and plans — our post on what the federal IDR process actually means for your medical bill explains how it works.
Glossary: Key billing terms to know when reviewing a facility fee bill
Facility fee disputes involve jargon that makes bills hard to decode. Here are the terms that matter most.
| Term | What It Means for Your Bill |
|---|---|
| Provider-Based Department (PBD) | A clinic or practice that a hospital has registered with CMS as part of its own facility under 42 CFR § 413.65. Being treated here means you can owe both a professional and a facility charge. |
| Professional Fee | The charge for the doctor's time and clinical work. Billed by the physician or their group, regardless of whether the site is hospital-owned. |
| Facility Fee | A separate charge for the use of the hospital's space, staff, and equipment. Appears only when the site bills as a hospital outpatient department. |
| Place of Service (POS) Code | A two-digit code on claims indicating where care was delivered. POS 11 = office (no facility fee should exist). POS 19 = off-campus outpatient hospital. POS 22 = on-campus outpatient hospital. |
| OPPS Rate | The Medicare payment rate under the Outpatient Prospective Payment System — the higher rate applicable to hospital outpatient departments. |
| PFS-Equivalent Rate | The lower Medicare Physician Fee Schedule rate. Medicare pays off-campus, non-excepted departments at this rate. In 2026, drug administration services at excepted off-campus departments also moved to this rate. |
| Excepted / Grandfathered Department | An off-campus provider-based department that was billing Medicare as of November 2, 2015 and retained its right to bill at the higher OPPS rate (with 2026 exceptions for drug administration services). |
| Good Faith Estimate (GFE) | A cost estimate owed to uninsured or self-pay patients before scheduled care under 45 CFR § 149.610. It must include expected facility fees. If your final bill exceeds the GFE by at least $400, you can start a patient-provider dispute within 120 days of the bill. |
| EOB (Explanation of Benefits) | A document from your insurer, not a bill, showing what was billed, what was allowed, and what you owe. Facility fees appear here as a separate line from the professional charge. |
| Revenue Code | A four-digit code on a UB-04 (hospital) claim that categorizes the type of service. Revenue code 0510 or 0516 often signals a clinic visit facility fee. Appears on your itemized hospital bill. |
About VerifyDoc: We help patients identify errors and overcharges on medical bills. We publish guides on hospital billing, the No Surprises Act, and disputing medical charges, updated as federal and state rules change.
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Check my bill — free preview →Frequently asked questions
Can a hospital-owned doctor's office legally charge me a facility fee if the building looks like a regular medical office?
Yes — if the practice has been registered with CMS as a provider-based department under 42 CFR § 413.65, the hospital is legally permitted to bill a facility fee regardless of what the building looks like. The determining factor is how the site is classified for Medicare billing purposes, not its physical appearance. However, for Medicare patients at off-campus locations, the hospital must give you written advance notice before the visit explaining that you'll owe both a facility and a professional copayment. If no such notice was provided, that is grounds to challenge the charge. For uninsured or self-pay patients, the No Surprises Act's Good Faith Estimate requirement (45 CFR § 149.610) means the facility fee should have been disclosed before your appointment.
How do I tell if a facility fee on my bill is from a hospital-owned practice versus a true hospital visit?
Look at the Place of Service (POS) code on your Explanation of Benefits or itemized bill. A POS code of 19 indicates an off-campus outpatient hospital department, and POS 22 indicates an on-campus outpatient hospital department — both can carry facility fees. A POS of 11 means an ordinary physician office, and if a facility fee appears alongside POS 11, that's a billing error you should dispute immediately. You can also call the billing department and ask directly whether the location is registered as a provider-based department under 42 CFR § 413.65. If they confirm it is, request a copy of the advance notice that should have been given to you before the visit.
My doctor was acquired by a hospital last year. Can I switch back to a non-hospital-owned practice to avoid facility fees?
Yes — choosing a physician whose practice is independently owned or employed by a non-hospital entity means no facility fee can be added. Before scheduling, ask the practice directly: "Is this location a hospital-based outpatient department, and will I be billed a facility fee?" You can also check Medicare's Care Compare tool or ask your insurer's member services to confirm how a specific location bills. For patients with commercial insurance, shopping for the same service at a freestanding ambulatory surgical center or independent physician office is often significantly cheaper for the same clinical service.
What can I do if my facility fee bill is higher than the Good Faith Estimate I received?
If your final bill is at least $400 higher than the Good Faith Estimate provided under 45 CFR § 149.610, you can start the patient-provider dispute resolution process within 120 days of receiving the bill. Start by contacting the billing department in writing and referencing the estimate you received, noting the specific dollar discrepancy and requesting a corrected bill. Keep copies of the original estimate. If the provider refuses to adjust the bill, you can file a complaint with the federal No Surprises Help Desk (1-800-985-3059) or submit a complaint to your state's insurance commissioner if your state has additional facility fee disclosure laws. Some states — including Colorado, Connecticut, Maine, and Washington — have enacted rules that go beyond the federal floor on facility fee transparency.