Site-neutral Payment Proposals Threaten Access to Care

Americans rely heavily on hospitals to provide 24/7 access to care for all types of patients, to serve as a safety net provider for vulnerable populations, and to have the resources needed to respond to disasters. These roles are not explicitly funded; instead they are built into a hospital’s overall cost structure and supported by revenues received from providing direct patient care. Hospitals are also subject to more comprehensive licensing, accreditation and regulatory requirements than other settings.

Yet some policymakers want to make total payment for a service provided in a hospital the same as when a service is provided in a physician office or ambulatory surgery center (ASC).

Lawmakers are considering three site-neutral payment changes that would result in lower payments to hospitals.

  • Paying hospitals for evaluation and management (E/M) services in the hospital outpatient department (HOPD) setting at the physician fee schedule (PFS) amount
  • Paying hospitals for 66 specified ambulatory payment classifications (APCs) at the PFS amount
  • Capping hospital payments for 12 proposed APCs at the ASC rate

According to the Medicare Payment Advisory Commission, Medicare margins are already negative 12.4 percent for outpatient services.

Implementing these policies would further erode HOPDs’ Medicare margins, threatening access to care.