Site neutrality gains steam with House passed Lower Costs, More Transparency Act

The US House of Representatives recently passed a large bipartisan legislative package, the Lower Costs, More Transparency Act (HR 5378), that among other things would impose the most significant expansion of Medicare site-neutral payments since Section 603 of the Balanced Budget Act of 2015.

Medicare payment rates vary based on where the patient service is being provided. Citing “recent growth in hospital acquisition of physician practices” as driving Medicare spending “without significant improvements in patient outcomes,” the Medicare Payment Advisory Commission (MedPAC) recommends that Congress “more closely align payment rates across ambulatory settings for selected services” as a means of producing savings to the Medicare program.

HR 5378 would require Medicare Part B payment for drug administration at off-campus hospital outpatient departments to be the same as that in other provider settings. Specifically, the policy would require a separate National Provider Identifier (NPI) and attestation for services furnished in each off-campus hospital outpatient department. The Congressional Budget Office has estimated this policy change will save the Medicare program US$3.7bn over ten years.

As noted by the American Hospital Association, the House legislation is just one of several federal initiatives addressing site-neutral payment. All eyes now turn to see whether the Senate will endorse the Site-based Invoicing and Transparency Enhancement (SITE) Act (S.1869), which would go further in ending the 2015 Balanced Budget Act site-neutral exceptions and produce an estimated US$34.3bn reduction in Medicare payments to hospitals over ten years. Whether the Senate will choose to adopt the site-neutral provisions in the House bill, or pass its own legislation remains an open question.

Site-neutral initiatives have also gained traction at the state level. A recent analysis by the National Conference of State Legislatures shows that several states have enacted laws requiring public notice of facility fees, or limiting or banning facility fee charges for specific services. The momentum in favor of site-neutral policies comes as many state legislatures are set to convene in early 2024. Underscoring the popularity of site-neutral initiatives among the voters, a December 2023 poll shows 74 percent support “banning facility fees everywhere for outpatient, same-day services, regardless of the service or where care is being provided.”

Norton Rose Fulbright will continue to monitor for pertinent updates related to federal and state site-neutral regulation. Please do not hesitate to reach out to our team with questions about the House bill or other federal and state legislation.