Medicare Framework Calls for Important Site-Neutral Reforms

Today, Senators Bill Cassidy (R-LA) and Maggie Hassan (D-NH) released a framework for Medicare site-neutral payment reform. The framework acknowledges that the current system of paying hospitals more than private physicians for the same services raises costs for patients and taxpayers, and calls for reforms. Moving to fully site-neutral payments could save around $150 billion for Medicare, could reduce premiums and cost sharing for Medicare beneficiaries by an additional $100 billion, and could encourage commercial insurance to adopt similar changes that would lead to as much as $200 billion of further deficit reduction. 

The Cassidy-Hassan framework, which could be used as a model for legislation, lays out the two main policy options Congress should pursue to move to full site-neutrality – one which impacts only off-campus hospital outpatient departments, and the more comprehensive option which includes on-campus hospital locations.

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

Paying the same amount for the same health care service, regardless of where that service is performed, is just common sense. Site-neutral payments are a long-overdue cost-reducing reform that have garnered bipartisan support for over a decade.

The release of this framework will hopefully lead to legislation that could reduce Medicare spending by $150 billion, reduce deficits by more than that, lower costs for beneficiaries, and limit incentives that are driving provider consolidation and escalating health care costs. That is what we call a win-win-win-win.

Given our dire fiscal situation and the high and rising cost of Medicare, any resulting legislation should prioritize deficit reduction. 

Site-neutral payments should also be expanded across Medicare, encompassing both on- and off-campus Hospital Outpatient Departments as well as Ambulatory Surgical Centers. And the Secretary of Health and Human Services should be directed to establish site-neutral rates based on safety and appropriate practice, avoiding arbitrary constraints that tie rates to the most frequently used service location.

Site-neutral reforms represent an important intersection of sound fiscal policy, lower costs for Medicare beneficiaries, and bipartisan support to help drive momentum. Lawmakers should build upon this important framework for the benefit of patients and the federal government alike.

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For more information, please contact Matt Klucher, Assistant Director for Media Relations, at klucher@crfb.org.