Outpatient facility fees charged by hospital outpatient departments are increasingly adding substantial costs to routine care, according to a new resource compilation by the Centre on Health Insurance Reforms (CHIR).
Research shows large site-of-service price gaps
CHIR’s Outpatient Facility Fee Reform Resource Library brings together a decade of analysis and policy work on how hospitals bill for outpatient services, site-of-service payment differences, and reform options such as site-neutral payment policies and bans on facility fees. The compilation synthesises evidence that when services move from physician offices to hospital outpatient departments (HOPDs), patients and insurers frequently face much higher total charges.
Analyses cited in the library include a Health Care Cost Institute (HCCI) review of commercial claims from 2018 to 2022 and a 2023 report from the Medicare Payment Advisory Commission (MedPAC). CHIR summarised these findings as showing that:
- Hospitals typically receive substantially higher payments for the same outpatient services than physician offices.
- Patients often pay both a clinician professional fee and a hospital facility fee for care in HOPDs, increasing overall costs.
- HCCI estimated that in 2022 prices at HOPDs ranged from 1.27 to 13.5 times those in physician offices for a range of services MedPAC suggested can be safely provided in physician offices.
Consequences and market responses
The resource library highlights an important market dynamic: because facility fees can yield higher revenue, hospitals have incentives to acquire physician practices and shift care into hospital settings. CHIR notes that facility fees have tended to grow faster than clinician professional fees, widening the price gap over time.
Those shifts have multiple consequences. For patients, the result can be unexpected and substantial out-of-pocket bills for routine outpatient care. For insurers and public payers, site-of-service differentials contribute to higher overall spending. For health systems and clinicians, the financial incentives may influence where care is delivered, with potential implications for access, continuity and the organisation of services.
Policy responses collated
CHIR’s library does more than assemble studies: it documents recent actions by state and federal policymakers who have sought to translate the research into evidence-based reforms. Policy approaches described include:
- Site-neutral payment policies — aligning payment rates across settings where care is clinically equivalent.
- Facility fee bans or restrictions — limiting when hospitals may bill an additional facility charge for certain outpatient services.
- Regulatory and legislative measures at state and federal levels aimed at improving price transparency and protecting patients from surprise charges.
The resource library is presented as a practical tool for policymakers, researchers and advocates seeking evidence to guide reform. It aggregates peer-reviewed studies, policy analyses and government reports that document price differentials, growth trends in facility fees, and the effects of various policy interventions.
What this means for South Africa
While the evidence in CHIR’s library is drawn from the United States, the mechanisms at play — higher hospital-based charges, site-of-service incentives and consolidation — are relevant wherever mixed public–private health systems and varied payment arrangements exist. South African policymakers and health funders monitoring costs and equity under the National Health Insurance policy may find the compiled evidence useful when considering rules on billing practices, provider contracting and where services should be delivered.
Patients concerned about unexpected outpatient bills should ask clinics and hospitals in advance whether a facility fee will be charged and request itemised estimates. As always, clinical decisions should be guided by clinicians; if cost is a concern, discuss alternatives with your healthcare provider or medical scheme.
CHIR’s Outpatient Facility Fee Reform Resource Library is publicly available and intended to inform ongoing debate and policy design on how to limit unnecessary cost escalation while preserving access to safe, appropriate care.
Please consult your clinic, medical scheme or a licensed healthcare professional for personal medical or billing advice.
