News & Updates

December 8, 2023

Hospital lobbies push back on site-neutral provision in House bill – Healthcare Dive, Dec. 8, 2023

Dive Brief:

  • Hospitals are up in arms over a bill in the U.S. House of Representatives that would equalize payments for drugs administered in outpatient clinics, regardless of ownership.
  • The American Hospital Association and the Federation of American Hospitals sent separate letters to Congress this week urging legislators to vote against the bill over the site-neutral provision, arguing it would threaten access to care by cutting hospitals’ Medicare payments.
  • The bipartisan Lower Costs, More Transparency Act is scheduled to come up for a House vote the week of Dec. 11.

Dive Insight:

Under Medicare, hospital outpatient departments receive higher reimbursement than independent physician offices and ambulatory surgery centers for providing the same care. Hospital-owned clinics can also charge additional facility fees to cover what they say are additional overhead costs, resulting in higher co-pays for patients.

Recently, some lawmakers on the Hill have reinvigorated efforts to enact site-neutral policies, where government reimbursement is the same for the same medical care, regardless of where it’s delivered.

Site neutrality has broad support among healthcare stakeholders, including doctors, but is maligned by hospitals, which would see Medicare revenue drop as a result.

Hospitals argue that site-neutral policies don’t take into account differences between hospital outpatient departments and other sites of care. Hospitals say their outpatient sites generally see sicker patients and have higher overhead costs, including investments in standby capacity in event of disasters and around-the-clock emergency care.

As such, the AHA and FAH came out swinging against the new bill’s site-neutral push for outpatient drug payment.

“Existing site-neutral payment cuts have already had a significantly negative impact on the financial sustainability of hospitals and health systems,” the AHA wrote in its letter. “This proposal would expand upon these shortfalls, further exacerbating the financial challenges facing many hospitals.”

Critics say the existing unequal payment structure drives up expenses for the Medicare program and patients through higher cost sharing. It also creates adverse incentives for consolidation, as hospitals acquire physician offices, change their designation and bring in more revenue for providing the same care.

Under current payment differentials, patients pay two to three times more for drugs administered in hospital outpatient settings compared with an independent physician office, according to the Alliance for Site Neutral Payment Reform, which advocates for equalized Medicare reimbursement.

The bill’s site-neutral requirement would save more than $3.7 billion over 10 years, and lower out-of-pocket costs for patients with cancer or autoimmune diseases, according to the Congressional Budget Office.

ASNPR sent a letter to lawmakers on Wednesday urging them to go farther and extend site-neutral payments to all services at off-campus hospital outpatient departments.