Senate HHS committee advances bill to ban hospital facility fees at provider‑based clinics

Senate File 1503, a bill to prohibit certain hospital “facility fees” at provider‑based clinics, was recommended to the Judiciary Committee by the Minnesota Senate Health and Human Services Committee on Feb. 18, 2025. The committee adopted an author’s amendment and voted to refer the bill to Judiciary.

The bill’s author, Senator Umu Verbaten, told the committee facility fees are charged when hospitals acquire clinics and designate them as provider‑based, allowing an additional charge unrelated to the individual patient’s care. “Facility fees don't improve the value or outcome of a doctor's visit for a patient. They simply improve the profit line for health care companies,” she said.

Why it matters: Supporters say facility fees raise out‑of‑pocket costs, are often not transparent and can hit rural Minnesotans hardest because they have fewer alternative providers. Opponents, including the Minnesota Hospital Association, said the fees cover facility overhead and warned that eliminating the revenue stream without a replacement could threaten services.

Key provisions: The bill defines facility fees, providers and clinics; prohibits facility fees for nonemergency services at provider‑based clinics (including telehealth) and for outpatient evaluation and management services; allows MDH to identify diagnostic imaging services that can be safely moved out of hospitals; requires health systems to report the facility fees they charged in the prior year to MDH; authorizes MDH rulemaking and grants enforcement authority to the attorney general and MDH (including administrative penalties up to $1,000 per occurrence) and repeals the current facility fee disclosure law.

Testimony: Melissa Finnegan, a constituent of the author, described a pediatric follow‑up visit she said generated a $201 professional charge and a $423 outpatient hospital charge despite the child never entering a hospital. “After several rounds of customer service calls…we learned that this charge was a facility fee,” Finnegan said, adding that the statutory notice (Minnesota statute 62 j 0.824) is inadequate in practice. Ben Ballio of the Minnesota Nurses Association said the bill advances price transparency and holds hospital systems accountable. Joe Schindler of the Minnesota Hospital Association said roughly “40% of our nonprofit hospitals are in the red” (quoting MHA audited financial data) and opposed the bill on financial grounds and on the scope of MDH authority.

Committee action and next steps: The committee adopted an A1 author’s amendment, then voted by voice to recommend SF1503, as amended, to the Judiciary Committee. The next formal consideration will be in Judiciary, where legal and enforcement issues will be considered further.

Context and limits: The author cited actions in other states — Connecticut, Colorado, Ohio and Texas — that have limited or banned certain facility fees. The bill does not prescribe a funding replacement for hospital revenue; hospital witnesses warned that eliminating fees without alternate funding could pressure service lines. The bill also grants MDH rulemaking authority to identify additional outpatient services to be included in the prohibition.