Pillar 06

Site-Neutral Payments

Payment Parity · HOPD vs. Physician Office · Medicare Savings

High
$153B Medicare savings estimate — CRFB (10-year, comprehensive reform)
$471B Total savings estimate — USC/Brookings
$290M CMS CY2026 site-neutral savings (first year)
2015 Year first site-neutral provision was enacted
01 FAH POSITION

FAH Position

FAH strongly opposes all site-neutral payment proposals, calling them devastating cuts to hospital funding.

FAH’s stated position: “Blunt site-neutral payment policies ignore fundamental functional and cost structure differences between hospitals and physician offices.”

02 EXPLAINER

What Site-Neutral Means

Currently, Medicare pays significantly more for the same service when provided at a hospital outpatient department than at a physician’s office. Site-neutral proposals would align these payments, paying the same rate regardless of setting.

Payment differential examples: The same cardiac stress test costs Medicare approximately $300 at a physician office and $500 at a hospital outpatient department. The same colonoscopy costs Medicare approximately $450 at an ASC and $1,100 at a hospital outpatient department. Patients pay higher cost-sharing at hospital settings.
03 FINANCIAL STAKES

Financial Stakes

Source Scope Estimate
Committee for Responsible Federal Budget Comprehensive $153B over 10 years
FTI Consulting (commissioned by Coalition to Strengthen America’s Healthcare, FAH founding member) Comprehensive $182B over 10 years ($12B Year 1)
USC/Brookings-affiliated analysis Total for Medicare and beneficiaries $471B over 10 years
CMS CY2026 OPPS Final Rule Drug administration only $290M in Year 1
04 HISTORY

Legislative and Regulatory History

Date Event
2015 Bipartisan Budget Act: Site-neutral enacted for new off-campus HOPDs — partial loss for FAH
CY2019 CMS OPPS Final Rule: Extended site-neutral to E&M visits at all off-campus HOPDs (60% reduction) — FAH opposed
2020 D.C. Circuit upheld CMS authority to impose site-neutral reductions — major loss for hospital lobby
2023 Lower Costs, More Transparency Act (H.R. 5378) passed House 320–71. FAH opposition letter December 7, 2023. Died in Senate — FAH victory.
November 2024 Cassidy-Hassan Senate Framework: FAH issued immediate opposition November 1, 2024
April 15, 2025 Trump Executive Order 14273: Directed HHS to propose regulations ensuring Medicare payments don’t encourage drug administration in HOPDs over physician offices
September 15, 2025 FAH opposition comment letter on CMS CY2026 OPPS proposed rule
November 21, 2025 CMS CY2026 OPPS Final Rule: Finalized expansion of site-neutral to drug administration in all excepted off-campus HOPDs

Sources