021323_Final_Commerc IalSiteNeutral.pdf

The main issues highlighted are:

- Site-Based Payments: These payments, differentiating rates based on care settings (e.g., physician offices vs. hospital outpatient departments), drive up healthcare spending and incentivize hospital consolidation of independent practices.

- Impact on Costs: Over a 10-year period (2024-2033), site-neutral policies could reduce national health expenditures by $458 billion, commercial premiums by $386 billion, and patient cost sharing by $73 billion, while also reducing the federal budget deficit by $117 billion.

- Problems with Site Differentials:
- Increased services in higher-cost settings: Medicare beneficiaries increasingly receive low-complexity services in HOPDs, a trend mirrored in private insurance claims.
- Hospital consolidation: Hospitals purchasing independent practices boosts their market power and pricing flexibility, leading to higher commercial prices. 80-90% of hospital markets are considered highly concentrated.

- Examples of Differential Pricing: Significant price variations exist for similar services provided in different settings. Facility fees charged by hospitals with owned physician practices often sum to higher total prices than office-based charges. This can cause patient confusion and increased out-of-pocket costs.

The Health Savers Initiative recommends a tiered policy strategy to move towards site-neutral payments, aiming to address market inefficiencies and reduce healthcare costs for both commercial insurers and patients.