More Medicare Site-Neutral Payments Likely, Congressional Adviser Says

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By Michael D. Williamson

Nov. 16 — Provider consolidation may encourage the further adoption of site-neutral Medicare payments, the executive director of a congressional advisory panel said Nov. 16.

Site-neutral payment policies are a way for the Centers for Medicare & Medicaid Services to pay providers an equal amount for an identical service, regardless of the care setting or Medicare payment system. Adopting site-neutral payments across Medicare would reduce reimbursements for some providers.

The various rates Medicare pays for identical services in different settings are a historical construct, Mark Miller, the executive director of the Medicare Payment Advisory Commission (MedPAC), said. However, in the future, there may be a push to expand site-neutral payments, Miller told attendees of a Bloomberg Government discussion on the future of Medicare.

The CMS is required by law to begin site-neutral payments for some hospital outpatient departments in 2017. The policy, which the CMS outlined in a Nov. 14 final rule (81 Fed. Reg. 79,562), is an attempt to address the practice of hospitals acquiring physician offices, then billing patients under the outpatient prospective payment system, which has higher reimbursement rates than the Medicare physician fee schedule.

MedPAC is a nonpartisan panel that advises Congress on Medicare payment issues. It releases formal recommendations to the Congress and the U.S. Department of Health and Human Services in March and June every year. The commission’s recommendations are fairly influential, although policy makers aren’t bound to follow them.

House Support

“Mark is a pretty good predictor of things that are coming,” Martin Corry, a health-care lobbyist, told Bloomberg BNA Nov. 16. Corry is the government relations and public policy department chair in Hooper, Lundy & Bookman PC’s Washington office.

Site-neutral payment enjoys strong support in the House, Corry said. For example, Ways and Means Committee Chairman Kevin Brady (R-Texas) has been a big advocate of site-neutral payments for the past few years.

Bundled Payments May Expand Too

In addition to site-neutral payments, policy makers are likely to further study the expansion of bundled payments in fee-for-service Medicare, Miller said.

Bundled payment models are another way the CMS is trying to reduce variations in treatment costs among hospitals while improving outcomes. With bundled payments, hospitals receive one payment for an entire episode of care that spans acute and post-acute care instead of receiving separate pay for individual services under the fee-for-service schedule. Hospitals could face a financial downside for not coordinating follow-up care.

Lawmakers and regulators will look to bundled payments “to try and bring some pressure on utilization,” Miller told the Bloomberg Government discussion attendees. The Better Medicare Alliance, a coalition that represents advocacy organizations, aging service agencies, health plans, providers, retiree organizations and beneficiaries supporting Medicare Advantage, sponsored the Bloomberg Government event.

Corry said considerable bipartisan support exists for bundled payments.

“I also think there will be discussions about beneficiary cost sharing,” Miller said. He added one goal of introducing cost-sharing arrangements may be to encourage the use of different, cheaper services and could be based on copayments or other mechanisms.

Trump’s Effect

Corry said it’s too early to predict President-elect Donald Trump’s effect on the future of Medicare payments.

Trump’s administration, once in power, will need to put together a budget and submit it to Congress, Corry said.

Congress, however, has been talking about and passing proposals with site-neutral and bundled payment policies for a couple of years now, Corry said. With Republicans in control of the presidency and Congress in 2017, there is no reason to believe they’ll back away from these policies, he said.

To contact the reporter on this story: Michael D. Williamson in Washington at

To contact the editor responsible for this story: Brian Broderick at

For More Information

A description of the Bloomberg Government event is at

The hospital outpatient payment final rule is at

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