Site-neutral payments for medical services could impact the most vulnerable patients, according to a study by the American Hospital Association. Site-neutral payments reimburse medical providers the same amount regardless of whether a patient receives care in a hospital outpatient department, physician’s office or ambulatory surgical centre. The study found that hospital outpatient departments treat Medicare beneficiaries with higher clinical needs, and are more likely to have an indicator of a social determinant of health, which could lead to site-neutral payments impacting vulnerable patients’ access to care.
A recent study conducted by KNG Health Consulting and released by the American Hospital Association (AHA) has highlighted the potential negative impacts of site-neutral payments on access to care, especially for vulnerable patients. Site-neutral payments refer to reimbursement rates for medical services that do not vary based on where the service is delivered. Traditionally, hospital outpatient departments have received higher reimbursement rates for the same services provided in an ambulatory setting, such as a physician’s office. However, the study found that hospital outpatient departments tend to treat Medicare beneficiaries with higher clinical needs, who are often more vulnerable and have a higher incidence of social determinants of health (SDOH) impacting outcomes.
The study covered the period from 2019 to 2021 and found that hospital outpatient department patients were 1.5 times more likely to be Black and 1.4 times more likely to be Hispanic compared to patients in independent physician offices and ambulatory surgical centers. Patients were also 1.9 times more likely to be dual eligible, indicating a higher incidence of socioeconomic disadvantage. Furthermore, hospital outpatient department beneficiaries were 1.6 times more likely to enter the Medicare program due to disability and/or end-stage renal disease. The Charlson Comorbidity Index (CCI) for hospital outpatient department beneficiaries was 3.1, compared to 2.2 for patients in independent physician offices, indicating a higher incidence of comorbidities. Hospital outpatient department beneficiaries were also 78% more likely to have at least one major comorbidity.
These findings have led the AHA to express concern that site-neutral payments could potentially threaten access to care for vulnerable patients. The AHA argues that hospitals and health systems provide around-the-clock care, including emergency services, to all patients, regardless of their ability to pay. Medicare already reimburses hospitals less than the cost of providing care, and site-neutral payments could exacerbate this issue, making it more difficult for hospitals to continue providing high-quality care to their communities. AHA President and CEO Rick Pollack stated that the study’s findings underscore the importance of ensuring that site-neutral payments do not threaten patient access to care.
However, some argue that site-neutral payments could help address the rising cost of healthcare in the United States. A recent analysis commissioned by the Blue Cross Blue Shield Association (BCBSA) found that expanding site-neutral payment policies in Medicare could generate $471 billion in savings for the government program, private health insurance premiums, and consumer out-of-pocket costs over ten years. David Merritt, BCBSA’s senior vice president of policy and advocacy, argues that rising healthcare costs are one of the main drivers of the healthcare affordability crisis in the United States and that site-neutral payments could help address this issue.
Site-neutral payments were initially mandated by the Balanced Budget Act of 2015 for services provided in newer off-campus hospital outpatient departments. However, departments established and operational in 2015 were grandfathered in and allowed to bill the higher outpatient Medicare rate for services. Hospitals and health systems have long argued that site-neutral payments harm their bottom line and access to care since they often spend more money and resources on standing up emergency care and treating sicker, lower-income patients. AHA previously reported that the federal government only paid 84 cents for every dollar hospitals spent providing care to Medicare beneficiaries.
In conclusion, the debate around site-neutral payments is complex, with both potential benefits and drawbacks. While expanding site-neutral payments could help address rising healthcare costs, it could also potentially threaten access to care for vulnerable patients. As policymakers consider the future of site-neutral payments, it will be important to weigh these competing priorities and ensure that any changes to reimbursement policies do not harm the ability of hospitals and health systems to provide high-quality care to their communities.
