Site-Neutral Coalition Formed As Obama, Congress Consider Equalizing Pay Among Settings

Health plans, cancer patients, nursing homes, and primary care doctors and internists have formed the Alliance for Site-Neutral Payment Reform to lobby Congress for pay policies that would reduce Medicare spending while increasing pay for providers in the coalition — a move that comes as President Obama pushes site-neutral pay policies for outpatient services in his 2016 budget. Lobbyists for providers across the four post-acute care sectors believe site-neutral pay is near the top of the list of offsets that Congress is considering to pay for an expected bill to override steep Medicare physician pay cuts scheduled for April 1.

The alliance is lobbying Congress to pay the same rates for services regardless of where those services are provided. The group wants site-neutral pay between hospital outpatient departments and physician offices, which would benefit family physicians and internists, and between nursing homes and inpatient rehabilitation facilities, which would benefit nursing homes.

Health plans would benefit from site-neutral policies because spending disparities in Medicare also apply to the commercial market, the alliance says. Cancer patients want site-neutral pay because they pay more for care when treated by oncologists who are employed by hospitals. Research by Milliman shows cancer care delivered in the hospital setting costs Medicare beneficiaries $650 more a year in out-of-pocket copayments compared to community-based care.

“The Alliance for Site-Neutral Payment Reform and our member organizations feel that it is time to address payment parity across site of service in order to decrease Medicare and commercial spending, ensure patients receive the right care in the right setting, lower taxpayers and beneficiary costs and increase patient access,” states a Jan. 20 alliance letter to congressional committees with jurisdiction over Medicare.

The president added a policy to his budget request this year that would pay the same Medicare rates for services provided in hospitals and doctors offices.

Site-neutral pay policies also could be applied to post-acute care services as Congress considers how to pay for either temporarily overriding pay cuts schedule by the Sustainable Growth Rate formula or replacing the formula. Even if Congress ends up fixing SGR this year, it will likely need to first patch it before the end of March, several lobbyists say. They believe that site-neutral pay policy between nursing homes and inpatient rehabilitation facilities is a likely offset candidate, in part because the Congressional Budget Office already scored that policy and because the president included the inpatient site-neutral policy in his past budget.

“The 2015 President’s Budget estimates that site neutral payment for select rehabilitation services could reduce Medicare costs by $2.4 billion over 10 years,” the alliance letter states.

Inpatient rehabilitation facilities say they do a better job than nursing homes in rehabilitating patients and are covered by stricter regulations that drive up their costs compared to nursing homes. Hospitals complain that their profit margins are razor thin and that cutting areas with higher profits will drive many of them out of business.

The alliance acknowledges the problems that hospitals face, and it says Congress should fix the payment system for hospitals and stop overpaying for services in outpatient departments to offset pay that is too low in other areas.

“Some hospitals now depend on HOPD payments to cross-subsidize other necessary patient care services, therefore alternative funding sources may be required to secure access to this care,” the letter by the Alliance for Site-Neutral Payment Reform states. — John Wilkerson (

See the original article on the Inside Health Policy website.