News & Updates

February 22, 2016

Alliance Urges Congress to Protect and Expand Site Neutral Payment Provisions in Budget

Group of providers, insurers and patient advocates urges lawmakers to expand site neutral reforms to include all hospital outpatient settings

WASHINGTON – The Alliance for Site Neutral Payment Reform (Alliance) urged leaders of the House Committee on Energy and Commerce and Subcommittee on Health in a letter submitted on February 12 to expand Section 603 in the Bipartisan Budget Act of 2015 (BBA) to equalize Medicare payments across all off-campus hospital outpatient departments (HOPDs).

The BBA established a site neutral payment policy for all newly acquired provider based off-campus HOPDs by aligning Medicare payment to any newly acquired physician practice that does not operate on the main campus of the hospital with payments to physicians that practice in other settings including independent physician practices of other community-based settings.

“This provision marks an important first step in equalizing Medicare payments across sites of service, which we believe reduces unnecessary healthcare spending and provides greater patient access,” the group wrote in a letter to Committee Chairman Fred Upton and Subcommittee Chairman Joe Pitts. “We further urge lawmakers to build on this policy and consider suggested commonsense expansions to this current provision.”

The Alliance asks the lawmakers to expand Section 603 to include all outpatient off-campus facilities, not just those HOPDs that are built or purchased after the November 2 enactment date outlined in the BBA. The Alliance urges against grandfathering existing facilities before the November 2 timeline, which the group warns would only increase both patient and Medicare costs.

While Section 603 is expected to save 9.3 billion dollars over 10 years, data suggest equalizing payments across all sites of service would save could save an additional 10 to 20 billion dollars.

A recent report by the Government Accountability Office (GAO) found that Medicare reimbursements varying across sites of service increase Medicare spending and encourage consolidation of physician practices with hospitals, escalating Medicare costs by $51 per mid-level evaluation and management (E/M) office visit performed in an HOPD instead of a freestanding physician’s office. To curb hospital-physician consolidation, the GAO recommended Congress equalize payments.

Other data from the National Institute of Health Care Reform found that discrepancies across site of service dramatically increase costs. The average price for magnetic resonance imaging (MRI) of a knee, for example, was about $900 in HOPDs compared to about $600 in physician offices or freestanding imaging centers. Similarly, the average HOPD price for a basic colonoscopy was $1,383 compared to $625 in the community setting.

In closing, the Alliance states, “Site neutral payment reform is a simple solution that President Obama, bipartisan lawmakers, MedPAC, GAO and healthcare advocates have all recognized as a vehicle for significant healthcare savings. This policy has been discussed and examined for years and Congress acted appropriately to protect Medicare patients and the Medicare program by enacting site neutral payment reforms however, additional reforms are needed to further reduce spending and protect patient access to care in the community setting.”

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