08.27.2020 / Statement

Statement: Site-Neutral Payments Stop Hospital Payment Games that Increase Costs for Families

Washington, D.C. – Consumers First: The Alliance to Make the Health Care System Work for Everyone released the following statement on the U.S. Court of Appeals for the District of Columbia Circuit’s recent ruling on site–neutral payments. 

Last month, the U.S. Court of Appeals for the District of Columbia ruled in American Hospital Association et al v. Alex M. Azar that the U.S. Department of Health and Human Services can legally mandate site–neutral payments to off-campus hospital facilities.  Consumers First (see below for a list of alliance members) strongly supports this decision. Payments to providers should be based on the value of the care being provided to consumers, not the physical location of the service. Paying hospitals more for the same care that is provided in doctors’ offices contributes to the growing trend of provider consolidation and, in turn, leads to high and rising health care costs for individuals, families, workers, and employers.  

For too long, hospital “off-campus” facilities have received higher Medicare reimbursement than providers who deliver the same services in physician offices at a lower cost and equivalent level of quality. Hospitals have leveraged this payment differential to their advantage, acquiring physician practices and rebranding them as “Hospital Outpatient Departments,” and then referring families for care at these more costly outpatient settings.  

Mandating site-neutral payments ensures that equivalent services are reimbursed at the same rate, regardless of where they are delivered.  That eliminates one of the payment incentives that drives high costs without a guarantee of higher quality care. Consumers First strongly supports implementing site-neutral payments not just for hospital outpatient departments but also for ambulatory surgery centers, freestanding and non-freestanding emergency departments, and off-campus provider-based entities. As a leading voice in consumer advocacy, we will continue to advocate for policies that increase value, lower costs, and put patients at the center of the health care conversation.