Pros and Cons of Site Neutral Payments

Donna White

Donna White

By Donna White, Principal Consultant and Owner of Legacy Consulting Services and Legacy Billing Solutions in Montgomery, Alabama.

Last week saw a push from hospitals to lobby lawmakers about CMS’s proposal for site neutral payments. The site neutral payment proposal would be to pay the same rate for services delivered at off-campus hospital outpatient departments and independent doctor’s offices.

According to CMS, they could save $610 million and patients could save $150 million via lower co-payments.
Hospitals argue that they have higher overhead costs, thus the necessary higher reimbursement rate. As the comment period for this proposal is now closed, lobbyists are getting into gear to get lawmakers on board with opposing this change. (Source:

The winners in this scenario, however, would be independent physicians, especially large physician groups. With the opportunity to raise the reimbursement to the same level as hospital-employed physicians, there could be a dramatic increase in reimbursement. Also, this could prevent the purchase of medical groups by hospitals or turning independent physicians into hospital-employed physicians.

This is a change hospital CEO’s have seen coming for years but is now becoming a potential reality. We expect to see a lot of activity in Congress in the coming months if this rule is finalized. The American Health Association (AHA) may sue CMS stating that it has exceeded its authority and has strayed from congressional intent.

Originally the different payment rates were set to offset a hospital’s higher overhead costs. However, we have seen an industry trend where health systems bought more physician groups to take advantage of the higher reimbursement rates…even if the now hospital-owned clinic didn’t look any different than a regular independent doctor’s office. Patient’s however, were often surprised with additional hospital fees.

In the end, this could be a billion-dollar loss for the hospital industry, but a more level playing field for independent physicians. While the cost savings are impressive, the hospital lobby is powerful enough to potentially get this delayed. We will continue to keep an eye on this story to keep you updated.

Leave a Comment

Your email address will not be published. Required fields are marked *

Skip to content