Facility Fee vs Physician Fee: Two Medicare Payments

Facility Fee vs Physician Fee: Why One Visit Can Mean Two Payments

When a service is performed in a hospital outpatient department or an ambulatory surgical center, Medicare makes two payments: one to the physician under the Physician Fee Schedule at the lower facility rate, and one to the facility. In a physician’s office there is one payment, at the higher office (non-facility) rate, because the practice bears the cost of the space, staff and supplies.

The physician’s payment Copy link

In a facility, the physician’s amount uses the facility practice expense RVU, which is lower because the facility supplies the resources. Work and malpractice RVUs are the same in both settings. For CPT 99213, the Q4 2026 national amount is $95.19 in an office and $57.45 in a facility. The $37.74 gap is practice expense.

The facility’s payment Copy link

Medicare pays the facility separately for the practice expense the physician’s facility rate leaves out. A hospital outpatient department is paid under the Hospital Outpatient Prospective Payment System (OPPS), and an ambulatory surgical center under Medicare’s ASC payment system. Neither payment comes from the Physician Fee Schedule, and neither equals the practice expense gap above. Localis does not yet calculate facility payments, so the amounts on this site are the physician’s share only.

Comparing settings means adding both payments Copy link

The physician’s facility amount alone understates what Medicare pays for a service performed in a facility. A fair comparison with the office adds the facility’s payment to the physician’s facility amount.

The imaging exception Copy link

For certain diagnostic imaging codes, the OPPS cap limits the office payment for the technical component to what OPPS would pay, so an imaging study in an office does not pay more than the same study in a hospital outpatient department.

Frequently asked Copy link

Why did I get two bills for one outpatient visit?

In a hospital outpatient department or ambulatory surgical center, the physician and the facility bill separately. Medicare pays the physician under the Physician Fee Schedule at the facility rate and pays the facility under its own payment system.

Why is the physician’s facility rate lower than the office rate?

In a facility, the facility is paid separately for space, staff and supplies, so the physician’s amount uses the lower facility practice expense RVU. Work and malpractice RVUs are the same in both settings.

Sources Copy link

Written from primary CMS sources—see how we source, compute, and verify everything on this site.

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