News & Updates

July 16, 2018

Alliance for Site Neutral Payment Reform Offers Support for Site Neutral Policy in a Letter to HHS Secretary Azar

The letter commends site neutral payment provision in President Trump’s American Patients First blueprint and urges the administration to expand site neutral payments in order to increase competition, preserve patient choice, and reduce healthcare costs

WASHINGTON––The Alliance for Site Neutral Payment Reform submitted a letterto Health and Human Services Secretary Alex Azar today providing support for the site neutral payment provision for physician-administered drugs in President Trump’s American Patients First Blueprint. The letter offers feedback on the implications of site neutral payment reform and urges the Administration to consider further expansion of site neutral payments for outpatient services.

The Alliance commends the Administration’s Blueprintfor correctly recognizing that the costs of services, including drug administration, can vary significantly according to the site of service under current policy. Hospital outpatient departments (HOPDs) are reimbursed at much higher rates than independent physician practices for providing the exact same services, which puts higher financial burdens on patients, employers, taxpayers, payers, and the healthcare system at large. Medicare patients pay an additional $411 million more out-of-pocket when seen in an HOPD instead of the physician’s office, according to one report.

The letter addresses the implications of site neutral payment reform on where medicine is practiced, how healthcare systems are organized, and how competition may be affected. Specifically, the Alliance points out how site neutral payment reform would slow the recent trend of vertical integration by removing the financial incentive for hospitals to absorb independent physician offices into their ecosystem, where they can charge a higher rate for the same service.

The letter states, “Payment parity is likely to have a positive effect in stemming consolidation and could inject additional competition into the marketplace, providing patients with more choice and increased access to various care settings,” particularly in rural areas of the country.

By protecting community clinics from being bought out at such a rapid rate, the Alliance believes that a site neutral payment policy will increase competition, quality of care for patients, preserve patient choice, and reduce costs for patients and other stakeholders.

“With a level playing field, hospitals and physician practices would compete on price and quality in order to attract patients,” the letter states. “This is ultimately a positive development for patients and payers because it will help keep costs down and promote continuous quality improvement while maintaining patient choice. As patients would likely pay less out-of-pocket costs, payers such as Medicare would be able to save billions over the next decade, ensuring that taxpayer dollars are spent more wisely.”



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