Site-Neutral Payments Could Threaten Access to Care, Study Suggests

March 28, 2023 - A new study released by the American Hospital Association (AHA) suggests that site-neutral payments could threaten access to care for some of the most vulnerable patients.

Site-neutral payments reimburse providers the same amount for medical services regardless of where the patient receives them. Typically, hospital outpatient departments receive a higher reimbursement rate for delivering the same services done in an ambulatory setting, such as a physician’s office.

However, the AHA study conducted by KNG Health Consulting found that hospital outpatient departments treat Medicare beneficiaries with higher clinical needs compared to independent physician offices and ambulatory surgical centers. Beneficiaries that received care at hospital outpatient departments during the study’s period from 2019 to 2021 were also more likely to have an indicator of a social determinant of health that impacts outcomes.

Hospital outpatient department patients were 1.5 times more likely to be Black and 1.4 times more likely to be Hispanic versus patients of independent physician offices and ambulatory surgical centers, according to the study. The patients were also 1.9 times more likely to be dual eligible.

Race and socioeconomic status are both social determinants of health fueling health disparities.

Other key findings from the study include:

• 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) was 3.1 for hospital outpatient department beneficiaries versus 2.2 for those treated independent physician offices
• Hospital outpatient department beneficiaries were also 78 percent more likely to have at least one major CC

AHA said in a statement that the study’s findings underscore why site-neutral payments for hospitals and health systems might threaten patient access to care.

“Hospitals and health systems provide around-the-clock care — including emergency services — to all who come to us. This includes the sickest patients and those left behind economically in our communities,” said AHA President and CEO Rick Pollack. “Medicare already reimburses hospitals, which have more comprehensive licensing, accreditation and regulatory requirements than independent physician offices and ambulatory surgical centers, less than the cost of providing care.”

A recent analysis commissioned by the Blue Cross Blue Shield Association (BCBSA) found that expanding site-neutral payment policies in Medicare would generate $471 billion in savings for the government program, private health insurance premiums, and consumer out-of-pocket costs over ten years.

“Rising prices for medical care are one of the main drivers of the [healthcare] affordability crisis in this country,” said David Merritt, BCBSA’s senior vice president of policy and advocacy.

The Balanced Budget Act of 2015 required site-neutral payments in Medicare for services rendered at 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 contended that these site-neutral payments harm their bottom line and access to care since they 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.