Are Facility Fees Covered by Insurance?

Healthcare billing often includes various charges that can be confusing for patients, and facility fees are a common example. These fees represent a component of a medical bill that can be unexpected, appearing even when care is received outside a traditional hospital building. Understanding how facility fees are applied and how health insurance plans address them is important for managing healthcare costs.

Understanding Facility Fees

A facility fee is a charge separate from the professional services provided by a doctor or other healthcare professional. It covers the operational costs associated with the physical location where care is delivered, such as the infrastructure, equipment, and support staff. These fees are typically assessed by hospitals or healthcare systems when services are rendered in a setting considered a department of the hospital, even if it appears to be a standalone clinic. For instance, a physician’s office might be owned by a hospital system, allowing it to bill as if the care was received within the main hospital, leading to a facility fee.

Hospitals charge these fees to cover expenses related to their 24/7 operations, including emergency and trauma care, specialized medical equipment, and maintaining regulatory standards. Unlike independent physician offices or ambulatory surgery centers, hospital-owned facilities must meet higher regulatory requirements and often care for patients with more complex conditions. Facility fees also help hospitals subsidize physician pay when reimbursement rates from public and private payers are low, ensuring access to a broad range of services.

Common scenarios where facility fees are applied include outpatient surgeries, diagnostic imaging like MRIs and CT scans, emergency room visits, and specialist consultations within hospital-owned clinics. For example, a single visit might result in two distinct charges: a professional fee for the physician’s expertise and an additional facility fee for the use of the hospital outpatient department. While some freestanding locations might combine these charges, many hospital-affiliated sites issue separate bills.

Insurance Coverage for Facility Fees

Health insurance plans generally cover facility fees, but the extent of coverage depends on the specific plan benefits and whether the provider is in-network or out-of-network. In-network providers have a contract with an insurance company, agreeing to provide services at pre-negotiated rates. When receiving care from an in-network facility, facility fees are typically covered, but patients remain responsible for their plan’s cost-sharing requirements, including deductibles, copayments, and coinsurance. For instance, an insurer might treat a facility fee as hospital care, which could have a separate deductible or coinsurance from the professional fee.

Out-of-network facility fees often result in significantly higher out-of-pocket costs for patients. An out-of-network provider does not have a contract with the health plan, meaning they can set their own rates, which are frequently higher than negotiated in-network rates. Depending on the policy, insurance may cover only a portion of out-of-network charges or nothing at all. In such cases, patients might be responsible for the entire difference between the provider’s charge and what the insurance plan is willing to pay, a practice known as balance billing.

Deductibles, copayments, and coinsurance apply to facility fees just as they do to other healthcare costs. Facility fees can be substantial, ranging from $15 to several hundred or even thousands of dollars, and can quickly contribute to a patient’s annual out-of-pocket maximum. For example, a pediatric visit could incur a facility fee of over $500, and a minor dermatology procedure could be over $6,000.

Some procedures that incur facility fees may also require prior authorization from the insurance company. This is a process where the healthcare provider obtains approval from the insurer before a service is rendered to confirm medical necessity and coverage. Without proper prior authorization, the insurance plan may deny coverage, leaving the patient responsible for the full cost.

Navigating Facility Fee Charges

Patients can take proactive steps to manage facility fee charges. Before receiving care, especially if the provider is part of a hospital system or the visit involves outpatient services, it is advisable to inquire about potential facility fees. Patients should ask if a facility fee will be charged, how much it might be, and if the service can be performed at another location without such a fee. Some facilities are required to provide an estimate of costs, though this estimate may only cover hospital charges and not physician fees.

After receiving care, carefully reviewing the Explanation of Benefits (EOB) statement from the insurance company is important. The EOB outlines how the insurance processed the claim, distinguishing between professional and facility fees, the amount covered, and the patient’s remaining responsibility. If the EOB shows an unexpected facility fee or an amount that appears incorrect, patients should contact the provider’s billing department for clarification or to request an itemized bill. An itemized bill lists all charges with billing codes, which can help identify potential errors.

If clarification from the provider’s billing department does not resolve the issue, patients can contact their insurance company to understand the coverage decision. Insurers have internal appeal processes that patients can utilize if they believe there was an error in how the claim was processed. When disputing charges, maintaining detailed records of communications, including dates, times, and names of individuals spoken with, is beneficial.

The No Surprises Act, effective January 1, 2022, offers certain protections against unexpected medical bills, including some facility fees. This federal law prevents balance billing for emergency services and for certain non-emergency services received from out-of-network providers at in-network facilities. Under this act, patients should only be charged their in-network cost-sharing amounts for these protected services. However, the No Surprises Act does not cover all facility fee concerns, particularly those for scheduled, non-emergency care where patients were notified of potential out-of-network charges.