Definition:
A facility fee is the charge made by a hospital for services provided at an associated outpatient clinic.1-2 These fees cover the cost of using and maintaining the health care facility.1 Per CMS, Medicare will reimburse facility fees from hospital-based facilities but will not reimburse physician offices that are not affiliated with a hospital.3
Facility fees are separate from professional fees charged by physicians or other providers for reimbursement. For example, a billing provider from a hospital-based clinic can bill a facility fee to cover the use of the hospital space, resources, and other overhead costs. Facility fees can range in cost depending on the specific health care service provided, insurance coverage, complexity of service provided, and the type of facility.2
The Hospital Outpatient Prospective Payment System (HOPPS) through CMS sets rates for designated hospital outpatient services, which are reviewed and adjusted annually. Most recently, facility fees have been billed as ambulatory payment classifications (APC) (i.e., 5012 + HCPCS code G0463). For the year 2025, CMS proposed to pay code G0463 at a payment rate of 40% of the HOPPS rate for any outpatient off-campus hospital setting.
How does it relate to ACO/PCMH?
At hospital-based outpatient clinics, the payment system has two components to the fee: a professional fee and a facility fee. These fees are used by the health system for reimbursement. Medicare will reimburse facility fees only if the hospital owns the group practice (will not reimburse facility fees for non-hospital affiliated offices). Pharmacists working in an ACO/PCMH model need to work with their billing/coding and compliance departments to develop appropriate documentation and submission of billing to be reimbursed. For example, only the facility fee (not the professional fee) for incident-to services provided by a pharmacist can be billed to Medicare in hospital-based outpatient clinics.
Involved organizations/oversight:
The oversight of facility fees varies depending on the health care system and jurisdiction. Regulating national and state agencies may set policies related to facility fees and overall health care pricing.3 The HOPPS annually establishes rules or changes to rules related to billing in hospital-based outpatient settings.4 Health insurance payers are also involved as they negotiate contracts with health care facilities, including rates and reimbursement methods for facility fees. One limitation of a facility fee is that reimbursement is capped at one per day. Therefore, the billing opportunities for a pharmacist may be limited if the patient sees another provider on the same day.
Resources:
- Colorado Hospital Association. (2024, October 10). Facility fees| Colorado Hospital Association. cha.com/policy-advocacy/regulatory-policy/regulatory-issues-by-agency/facility-fees/
- sections@ashp.org. (2024). Advancing Healthcare: Key steps to implementing Pharmacist provider status. www.ashp.org/-/media/assets/pharmacy-practice/resource-centers/ambulatory-care/docs/ASHP-SAG-Implementing-Provider-Status-FAQ.pdf
- FACILITY FEES and ACCOUNTABLE CARE ORGANIZATIONS.” Ct.gov, 2013, www.cga.ct.gov/2014/rpt/2014-R-0238.htm.
- 89 Fed. Reg. 59,186 (July 22, 2024) www.federalregister.gov/documents/2024/07/22/2024-15087/medicare-and-medicaid-programs-hospital-outpatient-prospective-payment-and-ambulatory-surgical
Follow-up question for SIG members:
How have facility fees impacted your clinical practice as a pharmacist in the PCMH/ACO setting?
Contributing authors:
Ashley Daffron, PharmD, BCACP
Assistant Professor, Department of Clinical Pharmacy
Skaggs School of Pharmacy and Pharmaceutical Sciences
University of Colorado Anschutz Medical Campus
Last Updated 12/15/2024