New Site-Neutral Bill Introduced in Senate
Senator John Kennedy (R-LA) introduced the Same Care, Lower Cost Act this week, which would take significant steps toward implementing site-neutral payments in Medicare. The bill would require Medicare to pay the same rates to both on- and off-campus hospital outpatient departments (HOPD) for the same service, potentially reducing deficits by $150 billion over the next decade.
As we have discussed before, under current law, Medicare pays more for services provided in an HOPD than for the same services provided in a physician’s office. The payment discrepancies are built into the Medicare fee schedules for different care settings and increase Medicare spending as well as beneficiaries’ cost sharing. The Same Care, Lower Cost Act would take an important step in reducing overall health care costs for taxpayers and beneficiaries.
The bill was designed with long-time recommendations from the Medicare Payment Advisory Committee (MedPAC) in mind. Specifically, this bill directs the Secretary of Health and Human Services to designate the billing codes that MedPAC recommended for site-neutral payments along with any other codes the Secretary deems appropriate. Additionally, this bill requires site-neutral payment rates at both on- and off-campus HOPDs. Although the Congressional Budget Office (CBO) has not released a score of the bill, we anticipate that the bill would save approximately $150 billion over ten years based on other CBO estimates. It would likely not score as high as the CBO budget option or our budget offsets bank estimates due to certain services that are carved out of the bill and the budget window difference.
While several bills have been introduced in the last few years to address site-neutrality, this bill is more comprehensive than others. For example, in 2023, the House passed the Lower Costs, More Transparency Act, which would have applied site-neutral payment rates to off-campus HOPDs for physician-administered prescription drugs, saving $4 billion over ten years. In 2023, Senator Kennedy cosponsored another effort with Senator Maggie Hassan (D-NH) and then-Senator Mike Braun (R-IN), the Site-based Invoicing and Transparency Enhancement (SITE) Act, which we estimated would save $30-40 billion over ten years based on CBO scores of similar legislation. The Same Care, Lower Cost Act is a step in the right direction for increasing savings and lower health care costs and deficits.
In a time of high and rising health care costs and ballooning federal debt, now is the time to enact policies that reduce costs for taxpayers and Medicare beneficiaries. Site-neutral payment policy has long held bipartisan support and that should continue. Lawmakers should work together to enact practical solutions that reduce health care costs; it is a simple win-win.
