News & Updates

July 26, 2019

Alliance Commends Site Neutral Provisions in Senate Drug Pricing Package

Site neutral policies in the Prescription Drug Pricing Reduction Act (PDPRA) of 2019 approved by the Senate Finance Committee will lower out-of-pocket costs for seniors

WASHINGTON—The Alliance for Site Neutral Payment Reform (Alliance) today applauded the Senate Finance Committee for incorporating two site neutral policies in the Prescription Drug Pricing Reduction Act (PDPRA) of 2019. If enacted into law, these provisions will increase transparency and lower out-of-pocket prescription drug costs for seniors.

Costs for physician administration of covered Medicare vaccines and other drugs vary dramatically according to the site of service. Currently, hospital outpatient departments (HOPDs) that are exempt from site neutral policies under the Bipartisan Budget Act of 2015 and the 21st Century Cures Act of 2015 are reimbursed at significantly higher rates than independent physician practices for providing the exact same services. For the administration of chemotherapy drugs, for example, the payment to a hospital outpatient facility is more than double the rate paid to a community cancer clinic ($288 vs $143). As a result, patients are paying higher out-of-pocket costs and employers, Medicare, and taxpayers are saddled with increasing costs to the health care system.

Section 111 of PDPRA would remove the exception for “grandfathered” off-campus HOPDs, and payment for the professional service of administering a Medicare Part B drug would be made at the physician office rate rather than the HOPD rate beginning January 1, 2021. Because Medicare beneficiary cost-sharing is directly related to the Medicare payment rate for the drug and the administration of the drug, this provision will have an immediate impact on out-of-pocket costs for seniors.

Under Section 106, the transparency tool created by the 21st Century Cures Act of 2015 would be modified to include information for services furnished in a physician office. This will help patients better understand the variations in cost by site of care and the impact on their out-of-pocket costs.

The Alliance commended the Senate Finance Committee for recognizing that the skyrocketing cost of healthcare is not sustainable for patients and taxpayers alike. Advancing the policies outlined above will help lower out-of-pocket costs, enable patients to make more informed healthcare decisions, provide stability to the Medicare program, and end payment disparities that have led to consolidation across the healthcare marketplace.


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