In recent years, hospitals have bought ordinary doctors' offices and clinics and started adding hospital facility fee charges for services provided at the doctors' offices and clinics.

If a state uses the new NCOIL model to create a law, the law will block health system efforts to add hospital facility fees to the bills submitted by ordinary doctors' offices and clinics that happen to be owned by hospitals.

Related: States crack down on hospital 'facility fees' for routine care, like colonoscopies

The model was sponsored by Dr. Tom Oliverson, who is an anesthesiologist, a Republican state representative in Texas and the immediate past president of NCOIL.

Oliverson said in a comment about adoption of the new model that he has seen the spread of unexpected hospital facility fees in his own life.

"There are instances where patients that went in for a doctor's visit 20 years ago and paid no facility fee are now going to the same office and receiving the same quality of care but seeing their medical costs unexpectedly increase as a result of these fees being imposed," Oliverson said.

The backdrop: "Site-neutral payment reforms" have been a hot topic for years now.

Karen Davenport, a senior research fellow at Georgetown University's Center on Health Insurance Reforms, told NCOIL members during a presentation in San Antonio in November 2024 that, as of that month, Connecticut, Indiana and Maine were examples of states with broad bans on hospital facility fees base established by homegrown bills.

Some other states had narrower facility fee bans, and Colorado, Nevada and Nebraska had hospital billing transparency requirements.

Alaska, Connecticut, Indiana, Maine, Maryland and Washington state had annual hospital facility fee reporting requirements.

Colorado and Connecticut had limits on consumers' out-of-pocket liability for balance billing related to outpatient facility fees.

NCOIL's impact: One question about the new NCOIL model, which is an original bill draft, is how many states will end up adopting the NCOIL model.

In theory, NCOIL should have more clout than the state insurance regulators' main group, the National Association of Insurance Commissioners, because NCOIL members have the ability to introduce bills in state legislatures.

In practice, some insurance commissioners benefit from being statewide elected officials in their own right, and both elected and appointed commissioners may stay in their posts for many years.

But the NCOIL model could influence model development at the NAIC and other policymaking groups, and it could shape the thinking even of bill drafters who decide to take a different approach to addressing the hospital facility fee issue.

Self-insured plans: Employers and their benefits advisors will want to see whether a state law based on the model will apply to all health plans, including self-insured employer health plans that come under the Employee Retirement Income Security Act framework, or only to state-regulated, fully insured employer health plans.

ERISA normally preempts state efforts to regulate self-insured plans. In the past, the courts have ruled that states can set rules, such as hospital rate-setting rules, that apply directly only to the hospitals, not to self-insured employer plans, but that have an indirect effect on self-insured employer plans.