Medicare Site-Neutral Payment Policies: Effects Of Proposals On Hospitals And Beneficiary Groups.

Abstract

Medicare pays hospital outpatient departments higher rates than ambulatory surgical centers and physician offices for providing similar health services. Policy makers are considering aligning payments across sites of care, but concerns have arisen about the potential disproportionate impacts of "site-neutral" payments on vulnerable providers and beneficiaries. We assessed the effects of three policy options on types of hospitals and beneficiaries. We found annual Medicare payment reductions ranging from $212 million to $7.36 billion across these options; variation was due to the scopes of services and types of hospital outpatient departments included. Small and rural hospitals paid under Medicare's outpatient prospective payment system would absorb the smallest shares of proposed cuts across the options, commensurate with their outpatient volumes. The effects of the policy options varied little by hospital type; more comprehensive options would yield larger payment reductions from all hospital types. Site-neutral payments would not have substantially different effects on beneficiary groups defined by dual-eligibility status or age.