States are moving to ban facility fees to rein in patient costs, and ASC leaders are warning that badly drafted bills could take away ASCs’ main source of revenue.
“That’s their only source of revenue, is facility fees,” Jon Van Valkenburg, executive director of Upstate Orthopedics Ambulatory Surgery Center in East Syracuse, N.Y., said Oct. 30 at Becker’s 32nd Annual Business and Operations of ASCs in Chicago. “It’s not some secret charge that we bill. … If there’s no facility fees, there’s no facilities.”
In June, Mr. Van Valkenburg was appointed the first representative of freestanding ASCs on the New York State Public Health and Health Planning Council.
An ASC’s facility fee covers the cost of running the center: staff, supplies, equipment and space. Surgeons bill their professional fees separately.
Those fees are already smaller than what hospitals get. ASC payment fell from about 85% of hospital outpatient department rates to 62% from 2019 and 2024, according to a KNG Health Consulting analysis for the Ambulatory Surgery Center Association. In 2026, Medicare’s national average facility payment for a knee arthroscopy is $1,644 in an ASC and $3,342 in an HOPD. The KNG analysis also credits ASCs with $27.9 billion in Medicare savings from 2019 to 2024.
Patients can also pay more in an ASC for some cases. Medicare caps coinsurance in the hospital setting, at $1,736 in 2026, but not in ASCs. A total knee replacement costs Medicare patients $142 more out of pocket in an ASC than in an HOPD, even though the total price is lower.
Kara Newbury, chief advocacy officer of the Ambulatory Surgery Center Association, called the policy a “double whammy.”
Nine states restrict outpatient facility fees, according to Georgetown University’s Center on Health Insurance Reforms. More than 20 have taken some regulatory action. Most of those laws target hospital-owned clinics, off-campus sites or telehealth. Connecticut bars facility fees for certain outpatient evaluation and management visits. Ohio bars them at primary care practices that hospitals bought after 2010. Indiana bars them at off-campus offices owned by large nonprofit systems.
Some broad proposals have been scaled back. Colorado’s 2023 law started as a ban on facility fees for all care delivered outside hospitals. The final version was limited to telehealth and new transparency rules. A bill that passed the North Carolina Senate last year would bar facility fees at hospital-owned clinics and physician offices but keep them for hospitals, emergency departments and ASCs. As of March, it had not advanced.
More states are lining up. In Iowa, Iowans for Affordable Healthcare is drafting a bill that would require hospitals to disclose facility fees and could ban them for outpatient and telehealth visits. The group plans to push the bill in the next legislative session. The effort followed patient complaints after University of Iowa Health Care acquired Des Moines-based Mission Cancer + Blood and added hospital facility fees to bills.
At least one bill would reach ASCs. As introduced March 19, Michigan HB 5770 would bar facility fees for telemedicine, for services at nonhospital facilities and for hospital outpatient services, with exceptions for emergency and observation care. ASCs and HOPDs would both fall under the bill’s definition of healthcare providers. The Ambulatory Surgery Center Association has warned that without facility reimbursements, ASCs cannot pay for the services and supplies needed to perform surgery.
The Michigan Health & Hospital Association also opposed the bill. It cleared committee with amendments Aug. 26 and reached the House floor, but it has not received a vote, according to the hospital association.
Mr. Van Valkenburg said the risk is in the wording. “That’s not what they’re trying to do,” he said, “but [it could] be an unintended result.”
He pointed to the No Surprises Act as an example of well-meant policy backfiring. He said it took away anesthesia groups’ out-of-network leverage with commercial payers, which pushed more of their costs onto facilities.
Anesthesia leaders have raised the same concern. The law, which took effect in January 2022, limits what out-of-network providers can bill and sends payment disputes to independent arbitration. Allyn Wilcock, CRNA, told Becker’s the limits favor insurers, which can push providers into in-network contracts and then hold or cut rates. Surgery centers are now “faced with revenue guarantees or stipends for anesthesia care,” Adam Spiegel, CEO of Irving, Texas-based NorthStar Anesthesia, told Becker’s.
During the panel, Andrew Lovewell, CEO of Columbia (Mo.) Orthopaedic Group, said the real target is hospitals charging facility fees for clinic visits. In his market, a physical therapy company with 20 locations recently signed with the local hospital, and those sites are now hospital-based.
He said a therapy visit can now cost $350, “more than the doctor gets paid to see the patient,” so 10 prescribed visits come to $3,500.
“They’re not going to get rid of the facility fee to the ASCs. That’s just not going to happen,” Mr. Lovewell said.
Federal policymakers are aiming at the same gap. Hospitals receive about 60% more from Medicare than other sites for similar services because of facility-fee differences, and lawmakers say that gives hospitals a reason to buy physician practices.
CMS’ 2026 outpatient payment rule pays physician-office rates for certain drug administration services at off-campus hospital departments, which CMS estimates will cut spending by about $290 million this year. These reforms are likely to lower hospital payments rather than raise ASC payments to match them.
“Every payer is focused on [site neutrality],” Mark Langston, CEO of Raleigh, N.C.-based Compass Surgical Partners, told Becker’s in February.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
