News & Updates

March 21, 2019

Alliance for Site Neutral Payment Reform Asks Lawmakers to Expand Payment Parity Across Sites of Services

Site neutral payment policies lower out-of-pocket costs for patients, provide stability for the Medicare program and promote transparency in the healthcare marketplace

WASHINGTON—The Alliance for Site Neutral Payment Reform hosted a Capitol Hill briefing today to underscore opportunities for expanding site neutral payment policy to address how Medicare patients are paying vastly different prices for the exact same service, depending on the site of care. During the briefing, site neutral advocates provided an overview of the Medicare payment process, discussed the real-world implications for patient and healthcare costs, and highlighted opportunities for congressional and regulatory action.

The briefing comes shortly after the Alliance submitted several letters to congressional leaders urging them to consider site neutral payment reforms to achieve significant health care savings that directly and positively impact beneficiaries, the Medicare program, employers and American taxpayers, as well as enhance transparency for patients.

“We strongly encourage you and your colleagues in Congress to embrace commonsense changes to our healthcare delivery system that will directly lower out-of-pocket costs for patients, provide savings and stability for the Medicare program and promote transparency in the healthcare marketplace. To do so, we urge Congress to expand the application of site neutral payment policies to all clinically appropriate outpatient services,” the Alliance stated in February letter to congressional leaders.

Under current Medicare regulations, the cost of care varies greatly between different delivery settings, even for the same services. Because most hospital outpatient departments (HOPDs) are able to command significantly higher reimbursement rates than community clinics and independent physician offices for carrying out the same services, Medicare beneficiaries and taxpayers are forced to unnecessarily pay hundreds of millions of dollars that could be saved if site neutral policies are expanded. According to an analysis by Avalere, Patients spent $411 million more in out-of-pocket costs over a three-year period when certain services were delivered in a hospital-owned setting.

In order to take advantage of the higher prices, more and more hospitals are absorbing independent physician offices into their networks through a process called vertical consolidation. This process has accelerated in recent years. According to the Government Accountability Office (GAO), the number of vertically consolidated hospitals increased from about 1,400 to 1,700, while the number of vertically consolidated physician offices nearly doubled from about 96,000 to 182,000 between 2007 and 2013. After an acquisition has taken place, the prices for physician services provided by hospital-acquired doctors increases by an average of 14 percent, costing millions of taxpayer dollars and out-of-pocket costs for patients.

“Site neutral payment reforms have long had bipartisan support from policymakers, healthcare economists, regulators and MedPAC. In terms of savings, a recent projection from the Congressional Budget Office suggests site neutral payments for outpatient services have the potential to save $13.9 billion over 10 years,” the Alliance added.

Speakers at the briefing included representatives from the Alliance, American Academy of Family Physicians and Avalere.


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