News & Updates

July 31, 2018

Alliance for Site Neutral Payment Reform Applauds Inclusion of Site Neutral Provision in New Proposed Medicare Rule

New rule would reduce spending for Medicare patients and the federal government by more than $760 million

WASHINGTON—Today the Alliance for Site Neutral Payment Reform commended the Centers for Medicare & Medicaid Services (CMS) for proposing to expand site neutral payments for all outpatient clinic visits in its CY19 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System proposed rule.

The rule, if finalized and implemented, would reduce the payment differences between sites of service, including hospital outpatient departments (HOPDs) and freestanding community clinics, which have been absorbed by hospital systems at an alarming rate in recent years. In addition to leveling the playing field between different sites of service, the proposed rule would empower patients to make more informed healthcare decisions by making the costs of healthcare, especially out-of-pocket costs, more transparent.

“We welcome the proposed site neutral policy included in the proposed outpatient rule and commend CMS for recognizing the fundamentally flawed payment systems that allow hospitals to charge drastically higher prices than community clinics for providing the exact same services,” said Randy Broun, MD, medical oncologist and president of Oncology Hematology Care. “Because healthcare costs have emerged as Americans’ primary financial concern, and the cost of care has been steadily rising—especially for Medicare patients with cancer—it is absolutely essential that CMS close the regulatory loopholes that drive up the costs of care for Medicare patients.”

CMS estimates that expanding site neutral payments will result in significant savings for both patients and the federal government. By reducing payment differences between sites, Medicare is projected to save $610 million as a result of the new rule, while patients will save $150 million in lower copays in 2019 alone.

Under current rules, both Medicare and patients pay more for services delivered in HOPDs than in freestanding physician offices: chemotherapy: $281 vs. $136; cardiac imaging: $2,078 vs. $655; colonoscopy: $1,383 vs. $625; even a basic E/M visit costs $51 more when performed in a HOPD.  As a result, Medicare patients have spent $411 million more in out-of-pocket costs over a three-year period when receiving certain services in an HOPD instead of the physician’s office.

Payment disparity is also driving the rapid acquisition of community practices by hospitals—a process called vertical integration. Between July 2014 and January 2015 alone more than 13,000 physician offices were converted into HOPDs so that hospitals could take advantage of higher reimbursement rates.

“Payment disparities across different sites of service create unjustified financial stress on patients and the Medicare program,” said Michael Munger, MD, president of the American Academy of Family Physicians. “Not only have Medicare beneficiaries been forced to pay more at HOPDs, but vertical integration has caused many community clinics to close their doors, ultimately undercutting patients’ right to choose where they receive their care. The Alliance for Site Neutral Reform looks forward to working with CMS to ensure this provision is finalized in the final rule so the cost of care is the same regardless of the setting patients choose.”


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