Hospitals that buy private physician practices immediately start charging a 'facility fee' on top of the office visit copay, and patients are not told until the bill arrives

When a hospital system acquires a physician's private practice, the same doctor in the same office seeing the same patient for the same condition can suddenly generate a bill that is $200-$600 higher than before. The difference is a 'facility fee' — a charge for hospital outpatient services that the practice can now bill because it is technically a hospital department, even though it is still a standalone office building miles from the hospital campus. Between 2012 and 2024, the percentage of physicians employed by hospitals doubled to 55%. In Connecticut alone, hospitals collected over $1.4 billion in facility fees in 2024. This matters because patients are blindsided. A parent takes their 3-year-old to a follow-up appointment at a pediatric clinic and gets a $423 bill for 'outpatient hospital services' even though the child never set foot in a hospital. A retiree sees the same cardiologist they have seen for a decade and suddenly owes $350 more than last year because the practice was acquired by a health system. The patient did nothing different. The doctor did nothing different. The location did not change. But the billing entity changed, and that change triggers a second bill that the patient had no reason to expect. This problem persists because of a regulatory loophole in how CMS defines 'provider-based' departments. When a hospital acquires a practice and designates it as an off-campus provider-based department, it can bill both a professional fee (the doctor's charge) and a facility fee (the hospital's charge) for the same visit. Only 21 states have passed laws targeting facility fees, and many of those laws are narrow — requiring only signage in the office on the day of the visit, which is ineffective because patients have already scheduled and traveled to the appointment. There is no federal prohibition, and hospitals have strong financial incentives to continue acquiring practices precisely because facility fees represent pure margin on existing patient volume.