News & Updates

May 4, 2018

Alliance for Site Neutral Payment Reform Applauds Site Neutral Policies in the Republican Study Committee’s FY 2019 Budget

The RSC budget calls for site neutral payments to apply to all off-campus care settings

WASHINGTON––The Alliance for Site Neutral Payment Reform submitted a letter to the Republican Study Committee (RSC) commending the group for including site neutral policies in the budget for fiscal year 2019. The policy, if adopted, would significantly lower Medicare spending and patients’ out-of-pocket costs, making the system more sustainable, while increasing patient access to essential services.

Under current policy, hospital outpatient departments (HOPDs) are reimbursed at significantly higher rates than independent physician practices for providing the exact same services. The result is increased costs for patients, employers, and taxpayers.

“We commend the Republican Study Committee’s FY19 budget for taking action to address this continued imbalance by calling for the expansion of site neutral policies throughout the Medicare program. This commonsense change to our healthcare delivery system would lower costs for patients, provide savings and stability for the Medicare program and promote competition in the healthcare marketplace,” the Alliance writes.

Because Medicare reimburses HOPDs at higher rates than community care clinics for providing the exact same services, billions of taxpayer dollars are being wasted. According to reports from the Centers for Medicare & Medicaid Services (CMS), the Government Accountability Office (GAO), and the National Institute for Health Care Reform, both individual patients and the Medicare system as a whole pay more when the same services are delivered in an HOPD setting instead of at a freestanding physician practice for a wide variety of services, including: chemotherapy: $281 vs. $136[1]; cardiac imaging: $2,078 vs. $655; colonoscopy: $1,383 vs. $625[2]; even a basic E/M visit costs $51 more when performed in a HOPD. As a result, Medicare paid an additional $2.7 billion on services and patients spent $411 million more in out-of-pocket costs over a three-year period when services were delivered in an HOPD.

The payment disparity is also driving the acquisition of community practices by hospitals, with more than 13,000 physician offices being converted into HOPD between July 2014 and January 2015 alone.While the Bipartisan Budget Act of 2015 (BBA) helped stem the tide by aligning reimbursement rates for HOPDs that have recently acquired physician practices, existing off-campus HOPDs are still exempt, necessitating the pragmatic reforms in the RSC FY 2019 budget.


[1]Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule and Other Revisions to Part B for CY 2018 (CMS-1676-P)

[2]Location, Location, Location: Hospital Outpatient Prices Much Higher than Community Settings for Identical Services, The National Institute for Health Care Reform (NIHCR): Published online June 2014

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