Key Takeaways from the Site-based Invoicing and Transparency Enhancement (SITE) Act

This week Senators Mike Braun (R-IN), Maggie Hassan (D-NH), and John Kennedy (R-LA) introduced the Site-based Invoicing and Transparency Enhancement (SITE) Act. The bill would adopt some site-neutral payments in Medicare and increase the transparency of hospital billing. These provisions would promote better efficiency and align incentives in the health care system, lower Medicare premiums and out-of-pocket costs, and could reduce the deficit by between $30 and $40 billion over a decade, based on prior estimates from the Congressional Budget Office (CBO). The bipartisan proposal, along with the push towards site neutrality, has broad support from across the ideological spectrum. 

In many cases, Medicare pays more for the same medical services when provided in hospital outpatient departments (HOPDs) versus independent physician offices despite the care being equally effective and safe. In our Health Savers Initiative brief, "Equalizing Medicare Payments Regardless of Site-of-Care," we found that site-neutral payments could save Medicare over $150 billion over a decade and could save beneficiaries over $90 billion in lower premiums and cost sharing.  

In the 2015 Bipartisan Budget Act, Congress mandated that certain services provided in a subset of HOPDs – those located ‘off-campus’ and away from a main hospital campus – be paid the same as physicians’ offices. However, they only applied the rule to future HOPD locations, not to existing ones. The SITE Act would eliminate this grandfather clause. 

Importantly, this Medicare policy could also lead to improvements in the rest of the health care system. As we’ve previously explained, adopting site-neutral payments will reduce the incentive for hospital consolidation, which can help lower overall costs and improve quality of care. 

Furthermore, commercial insurance payment practices often follow Medicare’s lead; site-based payments are no exception. In our brief “Moving to Site Neutrality in Commercial Insurance Payments,” we discussed the high spending and high commercial prices for hospital care, driven in part by the incentives to provide services in higher-cost HOPD settings and for hospitals to purchase independent physician offices, turning them into off-campus HOPDs. 

As the brief suggests, one step towards changing these incentives is to reduce the ability for off-campus HOPDs, which are often just physicians’ offices under a different ownership structure, to bill insurance companies as hospitals. Under current law, hospitals are not required to have a separate National Provider Identification number for their off-campus locations, which sometimes makes it difficult for insurance companies to understand where services are provided. This proposed legislation would require each location to have a unique identifier, allowing insurance companies to better negotiate off-campus services. 

In response to the SITE Act, Maya MacGuineas, president of the Committee for a Responsible Federal Budget, commented: 

Moving Medicare towards paying the same amount for the same health care services regardless of care setting is one of the best ways to reduce federal spending while also reducing costs for Medicare beneficiaries. This serious bipartisan reform also attacks incentives for consolidation and the resulting high health care prices. It is encouraging that Members of Congress from both parties are working together on site-neutral and related transparency legislation because reducing health care costs is an essential part of getting our fiscal house in order. 

While more legislative action would be needed to achieve full site neutrality, the SITE Act represents a large and important step in the right direction. With similar efforts among members in the House of Representatives and in the House Energy and Commerce Committee, hopefully policymakers will soon act to promote site-neutral payments in Medicare and the commercial insurance market.