News & Updates

February 14, 2023

Health Savers Initiative: Site-Neutral Payments Would Lower Private Health Costs, Encourage Competition

A recent report published by the Health Savers Initiative examined site-of-service payment issues in the commercial market. Digging into the problems with site-specific payments, the report explains, “site-based payments create incentives to provide services in higher-cost settings, generally hospital outpatient departments (HOPDs) instead of independent physician offices. Importantly, these site-based incentives also encourage vertical integration – with hospitals purchasing physician practices and converting them to HOPDs to garner higher payments. This consolidation increases the pricing power of large hospital systems, enabling them to demand higher prices in negotiations with commercial insurers.”

The report makes the following policy recommendations:

  • Prohibit off-campus HOPDs from billing facility fees
  • Expand site neutral payments for off-campus HOPDs
  • Extend site neutral payments to selected services at on-campus HOPDs that are low-complexity and typically done in physician offices.

In combination, these policies over the next 10 years could:

  • reduce premiums by up to $386 billion
  • reduce patient cost sharing by $73 billion.
  • reduce national health expenditures by up to $458 billion
  • reduce the federal budget deficit by up to $117 billion.

Read the full report here.