News Releases

Site-Neutral Legislative Proposals Would Cost Ohio Hospitals $10.5 Billion Over 10 Years

Congress is considering several legislative proposals that would impose additional site-neutral payment reductions to services provided in hospital outpatient departments (HOPDs). Under these policies, the payment for a service provided to a patient is the same regardless of the setting where the service is provided. These policies ignore fundamental functional and cost structure differences between various types of facilities and should be rejected by Congress.

Three proposals are currently under consideration:

• The off-campus cut for grandfathered drug administration services, which is included in H.R. 3281 and was passed by the House Emergency & Commerce Health Subcommittee, calls for drug administration services furnished in grandfathered off-campus HOPDs to be paid at a site-neutral rate beginning in 2025 and phased in over four years. This proposal would result in a cut to hospitals of $3 billion over 10 years, including a $148 million impact in Ohio.
• The off-campus cut for grandfathered non-evaluation and management (E&M) services, which was included in a recent Energy and Commerce Health Subcommittee hearing, calls for all services furnished in a grandfathered off-campus HOPD, other than E&M services, to be subject to site-neutral payment beginning in 2025. E&M services are already paid at a site-neutral rate. This proposal would result in a cut to hospitals of $31.2 billion over 10 years, including $2.1 billion in Ohio.
• A proposal also included in a recent Energy & Commerce subcommittee hearing is a legislative version of the Medicare Payment Advisory Commission’s (MedPAC) recent site-neutral recommendation to Congress. It would result in a cut of $180.6 billion over 10 years, including $8.3 billion in Ohio.

Flaws of Site Neutrality

These proposals ignore the substantial differences between hospitals and other care settings and would exacerbate Medicare’s chronic failure to cover the cost of care and jeopardize access to essential care and services.

Hospital outpatient departments — such as hospital-owned clinics that provide complex cancer, pediatric and mental health services — should not be paid the same Medicare rate as stand-alone physician offices. These outpatient departments treat more patients from medically underserved populations who tend to be sicker and more complex to care for than Medicare patients treated in independent physician offices and ambulatory surgical centers. They also are held to more rigorous licensing, accreditation and regulatory requirements.

The cost of care delivered in hospitals and health systems, including HOPDs, also needs to take into account the unique benefits that only they provide to their communities. This includes maintaining standby capacity for natural and man-made disasters, public health emergencies, other unexpected traumatic events, and the delivery of 24/7 emergency care to all who come through their doors, regardless of ability to pay or insurance status. Since the hospital safety-net and emergency standby roles are funded through the provision of all outpatient services, expanding site-neutral cuts to additional HOPDs and the outpatient services they provide would endanger the critical role that they play in their communities, including access to care for patients, especially the most medically complex.

Implementing site-neutral payment policies could force outpatient clinics to close or cut back on critical services, resulting in reduced patient access and job losses. Congress should reject site-neutral payment proposals.