Digital Debut

Facility Fee Restrictions Remain on the Agenda in 2024

Recent proposals narrow the scope but still leave ASCs exposed

BY STEPHEN ABRESCH | JUNE 21, 2024

Throughout 2024, state legislatures have kept the topic of facility fee restrictions alive, entertaining proposals that, if enacted, would prevent ASCs from billing facility fees. Advocates and lawmakers continue to describe these efforts as a way to address increased costs to patients associated with hospital acquisitions of physician practices, while failing to recognize the immense collateral damage these proposals would cause to the ASC community.

New proposals to restrict facility fees arrived recently, a time when most state legislatures are finishing or finished with their legislative business for the year. On June 12, the Ohio Senate amended facility fee restrictions into HB 49 and passed the bill out of the chamber the same day. A bill originally dealing with hospital price transparency, the Senate committee amendments added language that would prohibit any “independent outpatient physician facility” acquired at any point in time by a hospital or hospital system and operated as an “outpatient facility” from charging a facility fee. The definitions used for “outpatient facility” and “outpatient physician facility” put ASCs with any level of hospital ownership in the crosshairs, despite some of the verbiage suggesting the greater concern is hospital acquisition of small physician practices.

On May 22, the North Carolina Health Care Senate Standing Committee amended and passed HB 681, which originally dealt with interstate medical licensure compacts. The new language is strikingly similar to the facility fee restriction language amended into SB 321 by the same committee in 2023, a bill which ultimately found itself without support in the House due to those provisions.

Under the amended bill, healthcare providers—defined to include ASCs—are prohibited from billing facility fees unless the services are provided on a hospital’s main campus, at a remote location of a hospital or at a facility that includes an emergency department. Additionally, regardless of where services are provided, healthcare providers are prohibited from billing facility fees for outpatient evaluation and management services or any other outpatient, diagnostic or imaging services identified by the North Carolina Department of Health and Human Services as services that may reliably be provided safely and effectively in nonhospital settings.

The bill defines “facility fee” as any fee charged by a healthcare provider for outpatient services provided in a hospital-based facility that is intended to compensate for the healthcare provider’s operational expenses, separate and distinct from a professional fee, and charged regardless of the modality through which the healthcare services were provided. “Hospital-based facility” is defined as a facility that is owned or operated, in whole or in part, by a hospital where hospital or professional medical services are provided.

If passed, ASCs in North Carolina with any level of hospital ownership would find themselves unable to bill facility fees. Early reports suggest that HB 681 is likely facing a similar fate as SB 321 if it makes it back to the House, with little appetite in the lower chamber for the kinds of restrictions the Senate has pushed.

In Washington State, on January 15, Representative Steve Tharinger introduced legislation that would have broadly restricted facility fees. HB 2378 would have prohibited “affiliated health care providers”—defined as an individual, entity, corporation, person or organization that provides healthcare services in the normal course of business, including but not limited to health systems, hospitals and provider-based clinics—from charging a facility fee unless the services are provided on a hospital’s campus. The Washington Ambulatory Surgery Center Association (WASCA) educated their lawmakers about the impact of the bill, which helped bring the legislation to a halt in its first committee of referral.

In Maine, the state legislature released the final recommendations of the Task Force to Evaluate the Impact of Facility Fees on Patients on January 31. Composed of members of the legislature and representatives of organizations including Consumers for Affordable Health Care, the Maine Hospital Association, the National Academy for State Health Policy and Anthem Blue Cross Blue Shield, the task force’s recommendations highlighted limitations on facility fees based on location or type of service as areas for the legislature to focus on during the 2024 legislative session. The task force also explicitly stated that the legislature should consider “whether charges billed by ambulatory care facilities or other independent non-hospital-based facilities should be included in the scope of any legislation limiting the charging of a facility fee.” During a review of the recommendations by the Committee on Health Coverage, Insurance and Financial Services on February 6, legislators expressed unease with the recommendations to restrict facility fees based on site of service, saying they felt the chance for disaster was too great. Ultimately, the committee opted only to report out legislation related to transparency requirements for facility fees and restrictions on facility fees for telehealth services.

With the year only half over, there is still ample opportunity for state legislatures to consider facility fee restrictions, whether through legislation, task forces or interim committee studies, and there is always the possibility of the issue resurfacing in 2025 in states where it flounders this year.

ASCA continues to closely monitor and report on this issue across all 50 states and has recently released an issue brief summarizing its position on the issue. The issue brief is designed to help ASCA members educate elected officials and policymakers about facility fees and the role they play in ASCs by providing information on what facility fees are, why they are crucial for the operation of ASCs, and examples of the supplies and services covered by Medicare facility fee reimbursements for ASCs.

Write Stephen Abresch with any questions.