Employer groups are supporting legislation that would prevent medical groups owned by hospitals from charging more for services than private providers. The Lower Costs, More Transparency Act (H.R. 5378) includes provisions requiring “site-neutral” payments for drug administration in off-campus hospital outpatient departments. The bipartisan measure could come to a vote in the House as early as Monday.
The site-neutral payments requirement would save Medicare $3.8 billion over 10 years and lower out-of-pocket costs for patients with cancer and autoimmune diseases. This has been stated in the Congressional Budget Office’s baseline projections for Medicare in May 2022.
Hospital Dollars
Hospital spending is the largest health care spending category in the US, amounting to $1.3 trillion of the $4.3 trillion in US health expenditures in 2021. Spending on hospital services accounts for 44% of total personal health care costs for the privately insured. In addition to reducing costs under Medicare and in employer plans, imposing site neutrality could help quell hospital consolidation and acquisitions.
Employers support the site-neutrality bill in Congress, as it could lead to substantial savings in both the commercial and individual markets. About $847 billion could be saved by employer health plans in the 10-year period from 2024 to 2033 if services performed in medical practices owned by hospitals were paid at the same rates as independent offices, according to an estimate from University of Minnesota economist Steve Parente.
‘Nothing Neutral’ About It
The American Hospital Association opposes site neutral proposals, arguing that there is nothing neutral about site neutral and that hospitals provide a higher level of care, treat sicker, older, and lower-income patients. The association also emphasized that efforts to expand so-called “site-neutral” payments threaten hospitals’ ability to maintain access to essential health care services.
Along with site neutrality, H.R. 5378 would codify Trump administration rules requiring hospitals and health plans to make their negotiated prices for services public. Additionally, the legislation also would require that bills provided by medical offices be coded to show where the services were provided.