KFF Issue Brief and Roundtable: Site Neutral Payments

In order to rein in runaway healthcare spending under the Medicare program, political interest has turned to site-neutral payments as a method of keeping costs low. This week, KFF looks into site neutral payments in a new fact sheet and podcast.

Hypothetically, site-neutral payment reforms would reduce the amount Medicare pays for certain services in more expensive settings which would then discourage hospitals from the ongoing trend of private practice acquisitions, which tempers market competition and drives up costs. According to the KFF issue brief, lawmakers are already working to bring costs from care provided in hospital outpatient departments in line with ambulatory surgical centers (ASCs), and more bills will likely follow to pursue statutory requirements for site-neutrality.

KFF also convened a panel of experts with Larry Levitt, KFF’s executive vice president for health policy, for a discussion on site-neutral payments conceptually as an installment of its Health Wonk Shop virtual series. The panel discussed how site neutrality is unusual for Medicare reimbursement policy, which usually discerns reimbursement based on factors like location and entity size.

The American Hospital Association participated in the panel and pushed back on the notion of site neutrality, emphasizing how Medicare payment rates should recognize the differences between patient care delivered in hospitals as opposed to other settings. From AHA’s senior vice president for public policy, Ashley Thompson:

The patients that are seen in hospital outpatient departments are typically sicker and much more complex, and hospital outpatient departments are held by higher standards of rules and regulations and licensure.