The idea of requiring site-neutral payments in Medicare -- in which providers would be reimbursed at the same rate for performing the same service, regardless of where it's performed -- appears to be gaining steam on Capitol Hill.
"We are decreasing the out-of-pocket expense for someone receiving the exact same care at the same doctor's office with the same equipment and the same nurse" in cases where the cost of the service increased after the hospital bought the doctor's practice, Sen. Bill Cassidy, MD (R-La.), said Wednesday at a site-neutral payment event sponsored by Politico and the Leukemia & Lymphoma Society. Cassidy, ranking member of the Senate Health, Education, Labor, & Pensions (HELP) Committee, was referring to a bill which he and Sen. Maggie Hassan (D-N.H.) are developing.
Hospitals, which have been receiving higher payments for services performed at physician practices they own, as compared with independent physician practices, "have been concerned about the impact of these reforms on their finances," Zachary Levinson, project director of the KFF Project on Hospital Costs, said during a separate panel at the event. "Hospitals have argued that the higher rates that they receive are commensurate with the higher costs of providing care in hospitals, as well as the costs of providing certain essential services, like 24/7 emergency care. And there's also a concern that just as these reforms would save money for the government, they'd also be reducing revenues for hospitals, and that could have implications for patient access to care."
Under the bill framework that Cassidy and Hassan released last month, options for increasing site-neutral payment for services provided to Medicare beneficiaries include:
The Cassidy-Hassan framework is not the only site-neutral payment effort in Congress right now. In December 2023, the House passed the Lower Costs, More Transparency Act, which would lower Medicare payments for drug administration provided at off-campus hospital outpatient departments, said Levinson. The bill, which was sponsored by Rep. Cathy McMorris Rodgers (R-Wash.) and co-sponsored by Rep. Frank Pallone (D-N.J.) has yet to see action in the Senate.
Beth Feldpush, DrPH, senior vice president of advocacy and policy for America's Essential Hospitals, a trade group for safety-net hospitals, said she often talks about financing for her member hospitals as "looking sort of like a Jenga tower" in which the hospitals piece together funding from a variety of sources, including Disproportionate Share Hospital funding, graduate medical education funding, 340B drug discounts, and other sources. "You get a structure and it stands and it's not sturdy, but what happens is, when you start to pull out all of those little planks -- it could be just one plank -- but it all starts to wobble, and eventually it will fall down," she said.
"We use this terminology -- 'site-neutral' cuts -- but I think that's a false equivalency, because there's nothing neutral about this," she continued, noting that of the site-neutral cuts currently in place, 5% of hospitals take 12% to 14% of the cuts. "This is money coming out of the healthcare system, and it has this disproportionate impact on those safety-net hospitals. I prefer that we focus really on value and making sure that every patient is getting the best care in the right setting. For many, many patients, that's their physician's office ... but some patients, particularly those that are more medically complex or low income and have these higher social needs, they need those services like social workers, language interpreter services, and integrated lab radiology that integrated health system clinics can provide."