Skip to main content

Hospitals Push Back Against Proposed Site-Neutral Payments

Analysis  |  By Marie DeFreitas  
   November 11, 2024

This proposal isn't sitting well with the industry.

Hospital leaders are fighting back against a Senate position paper advocating for site-neutral payments.

The proposal, drafted by U.S. Sens. Bill Cassidy, MD, R-La., and Maggie Hassan D-N.H., 1 advocates for site-neutral payments to reduce patient healthcare costs, reduce provider consolidation, improve Medicare financials, and aid rural hospitals in high-need areas.

Under this payment structure, Medicare would be required to pay the same rate for services carried out regardless of the care location. Medicare payment rates currently recognize fundamental differences between care in hospital outpatient departments and other settings.

Unsurprisingly, the American Hospital Association is not on board with this plan, arguing it would destabilize patient access to care.

"Simply put, this framework from Senators Hassan and Cassidy will limit and eliminate critical hospital-based care, resulting in increased wait times and decreased access to care for patients. It is irresponsible to think that clawing back up to $140 billion of Medicare spending for seniors won't destabilize access to care," AHA Executive Vice President Stacey Hughes said in a statement.

"Rather than addressing the root causes driving physician acquisitions, this instead proposes dramatic and untenable Medicare cuts, reducing seniors' access to critical hospital-based care," Hughes said "We urge Congress to address the true drivers of physician acquisitions, which include significant underpayments to providers and persistent delays and denials of care by commercial insurers."

Brian Peters, CEO of the Michigan Health & Hospital Association, wrote about the disadvantages of the proposal on LinkedIn, arguing that site-neutral payments ignore the very different cost structures between hospitals and other care sites.

"Here is an economic reality: being prepared to care for anyone, for any diagnosis, at any time, creates high fixed costs," he wrote. "[...] comparing hospitals with other sites of care is not comparing apples and oranges – it's comparing apples and space shuttles. More importantly, reducing healthcare costs can't come at the expense of reduced access to care."

The CFO Playbook

As hospitals push back against the proposal, CFOs must evaluate the potential financial and strategic impacts and zoom in on a few key considerations:

Cost Efficiency Initiatives: CFOs may need to step on the gas pedal to streamline operations, optimize workflows, and identify the best areas for cost reduction. The push for site-neutral payments is an incentive to adopt more efficient care delivery models, particularly in outpatient settings.

Advocacy and Policy Engagement: CFOs can get involved in ongoing discussions with policymakers and industry groups to provide data-driven insights into the financial challenges of hospitals. Engaging in advocacy can help ensure that the specific needs of their organizations—especially safety-net hospitals—are considered in future legislation.

Revenue Diversification: Providers could explore diversifying their revenue streams to reduce dependency on outpatient services. They can also focus on investing in value-based care models, which could potentially offer more predictable financial stability in a shifting reimbursement environment.

Marie DeFreitas is the CFO editor for HealthLeaders.


KEY TAKEAWAYS

Two senators have drafted a proposal advocating for site-neutral payments between hospitals and other care sites.

Many industry groups and providers have expressed their distaste for the proposal, arguing it will be detrimental to patient care access.

CFOs will need to carefully strategize in various ways to prepare for the potential passing of this proposal.


Get the latest on healthcare leadership in your inbox.