States should bar hospital facility fees for routine care in doctors' offices
Medicare already pays hospital-owned clinics office rates for some routine services, and patients with private insurance deserve the same protection.
Medicare settled a basic question years ago: a routine visit at a hospital-owned clinic away from the main hospital should not cost much more than the same visit at an independent doctor's office. In July 2020, a federal appeals court upheld1 Medicare's policy of paying many of those clinic visits at the same rate it pays physician offices.
The Centers for Medicare & Medicaid Services (CMS) has kept going. This year, it extended the same approach2 to drug administration at those sites, a change it estimated would save patients $70 million in coinsurance in 2026. In July, it proposed3 adding imaging without contrast, such as X-rays, for 2027, with an exemption for rural sole community hospitals. CMS had not issued4 the final 2027 rule as of Nov. 3.
People with private insurance have no such rule. Of 57 services that can be done in either setting, the price paid under employer coverage was higher in hospital outpatient departments than in doctors' offices for every service in every year from 2018 to 2022, the Health Care Cost Institute (HCCI) found5 in a 2025 report. In 2022, the simplest category of imaging without contrast, which includes basic X-rays, averaged $227 in a hospital outpatient department and $61 in a physician's office.
That gap reaches more patients as hospitals buy practices. Nearly half of U.S. physicians are now part of hospital systems, up from less than 30% in 2012, The Washington Post reported6 last month. Once a hospital system owns an office, routine care there can be billed at hospital rates with a facility fee added, even when patients never step into a hospital, the Post found. A patient who owes a deductible or coinsurance pays a share of that higher price.
Our view is that the price of routine care should follow the service, not the owner of the building. Congress has not done this for private plans, so states should.
The hospitals' case
The American Hospital Association (AHA) makes the strongest case against limits. Its fact sheet on facility fees7 says the fees help pay for care that only hospitals keep ready around the clock, such as emergency and trauma services, and that hospital outpatient departments meet stricter regulatory standards and treat sicker patients and a higher share of uninsured patients than independent offices. Jason Kleinman, the AHA's director of federal relations, warned in comments reported by the Post that if limits cut hospitals' overall profits, hospitals would have to consider cutting money-losing services, such as burn units and behavioral health care in some regions.
Those costs are real, but they belong to emergency departments, trauma units and inpatient floors, not to a follow-up visit or an X-ray in a building off the hospital campus. A law aimed at routine office care can leave those services alone. New Mexico's 2026 law8, which bars facility fees billed to patients for preventive care, vaccinations and telehealth, exempts inpatient care, emergency departments, and rural hospitals and clinics. CMS's imaging proposal exempts rural sole community hospitals. If burn units and behavioral health care need support, that support should be paid for openly, not through surcharges on office visits that land on patients with deductibles.
Sicker patients and stricter standards are reasons to pay more for care that requires them. They are not reasons to charge more for an identical visit or X-ray because a hospital owns the office.
What should happen
Legislative proposals to apply Medicare's approach to commercial insurers "have gone nowhere," the Post reported. States have moved instead. Georgetown University's Center on Health Insurance Reforms has tracked nine states with laws limiting the fees, according to the Post, and Maine and Connecticut go furthest, banning them for most routine office care.
Legislatures in the other states should use their 2027 sessions to follow Maine and Connecticut: bar facility fees for office visits, telehealth and imaging without contrast at hospital-owned sites off the main campus, with clear exemptions for emergency departments, inpatient care and rural hospitals. CMS should finalize its imaging proposal as written. An X-ray in an office park should cost about the same, whoever owns the building.