Site-Neutral Payment

Site-neutral payment is the policy idea that a medical service should be paid the same amount regardless of where it is performed. Today it is not. A hospital outpatient department is paid more than a surgery center or a doctor's office for the same procedure, and it can add a facility fee that the office cannot. Site-neutral policy would close that gap, and it has become one of the few healthcare cost ideas with support in both political parties.

Some of it has already happened. Since 2019 Medicare has paid hospital-owned clinics the office rate for routine clinic visits, a change that saved Medicare and its patients hundreds of millions of dollars a year and that the hospital industry fought in court and lost. Bills in Congress would extend that to imaging, drug infusions and more outpatient procedures at hospital-owned locations away from the main campus, and the Congressional Budget Office has scored those proposals at $100 billion or more in ten-year savings. Commercial plans and self-funded employers do not have to wait for Congress: they can write site-neutral terms into their own contracts and plan documents, paying the freestanding rate wherever the service is done, or steering members to the freestanding site through lower cost-sharing. Hospitals argue they need the higher payments to fund emergency rooms and charity care, which is a real argument about a real problem, but it is not a reason for a colonoscopy to cost twice as much across the street.

The takeaway: if you run a self-funded plan, ask your advisor what a site-neutral benefit design would save on your own claims. For a member, site neutrality is the reason to ask where else a service can be done.