BCBSA: Broader site-neutral payment policies would save $471B over 10 years

Adopting broader site-neutral payment policies for Medicare would generate $471 billion in savings for the government program, private insurance premiums and enrollees’ out-of-pocket costs over the course of a decade, according to a new cost impact analysis commissioned by the Blue Cross Blue Shield Association (BCBSA).

So-called site-neutral policies would bring payments for outpatient services delivered at hospital outpatient departments to those of doctors’ offices and similar settings.

They have been largely opposed by the hospital industry, which took to the courts to stall out efforts from the Trump and Biden administrations to roll out site-neutral payments.

Specifically, BCBSA’s new analysis found that the federal government would see $231 million in savings from 2024 to 2033 from adopting the policies, while private premiums and out-of-pocket payments would be trimmed by $117 million and $152 million, respectively. The review was conducted by Phil Ellis, an independent health policy and economic analysis consultant and former Congressional Budget Office economist.

The findings headlined a policy brief from BCBSA urging policymakers to pass federal legislation striking a provision in the Bipartisan Budget Act of 2015 that grandfathered many existing off-campus hospital outpatient departments—as well as physician practices later purchased by a grandfathered organization—from site-neutral billing limitations.

Medicare should also adopt site-neutral policies for common out-of-hospital services with the notable exception of rural facilities, BCBSA continued. Doing so would “smooth the way” for private plans to follow suit, the group wrote in its brief.

Alongside the reduced charges, advocates for site-neutral payment policies have also highlighted how the current higher rates allowed to hospital outpatient departments act as an incentive for hospitals to buy up independent practices. Bringing rates in line could slow down the purchases and limit further provider consolidation, BCBSA and other advocates said.

“Rising prices for medical care are one of the main drivers of the health care affordability crisis in this country,” David Merritt, BCBSA’s senior vice president of policy and advocacy, said in a release. “Hospitals have strong financial incentive to continue purchasing physician practices, giving these new entities the upper hand when negotiating payment rates with insurers, resulting in higher costs for patients. Congress must protect patients from these inappropriate billing practices by expanding site-neutral payment policies and cracking down on anti-competitive behavior among providers.”

The arguments aren’t persuasive for the hospital industry. Roslyne Schulman, director of outpatient payment policy at the American Hospital Association, said in response to the report that her organization “continues to strongly oppose further site-neutral cuts, which would be devastating to hospitals.”

The site-neutral payment policies already enacted have proven to be a “significant blow to hospital financial stability” as the industry contends with the financial impacts of the COVID-19 pandemic, workforce shortages and other macro-level issues, she told Fierce Healthcare in an email statement.

Of note, she said the policies don’t take into account the increased costs hospitals incur compared to other sites of care.

“Hospitals are open 24/7, held to higher regulatory standards and are often the only point of access for patients with the most severe chronic conditions, all of whom receive emergency medical treatment regardless of ability to pay,” she said.

“Now more than ever, hospitals need stable and adequate reimbursements for what is a highly challenging environment. Since the hospital safety-net and emergency stand-by role are funded through the provision of all outpatient services, expanding site-neutral cuts to all hospital outpatient departments would endanger the critical role that hospital-based outpatient departments play in their communities, including access to care for patients, especially the most medically complex,” she said.

An increasing portion of medical care has shifted from inpatient units to outpatient settings, a trend that’s only accelerated during the pandemic. A recent analysis from Peterson-KFF Health System Tracker also notes that outpatient visits are more often being billed at higher levels compared to a decade prior, which also contributes to higher outpatient health spending.