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‘Site-neutral’ hospital policy muddles health package progress

Time is running out if lawmakers want to attach health care to a spending bill

Senate Finance Chair Ron Wyden and ranking member Mike Crapo have expressed support for the “site-neutral” policy, but Wyden says he is still working to understand the impact on rural hospitals.
Senate Finance Chair Ron Wyden and ranking member Mike Crapo have expressed support for the “site-neutral” policy, but Wyden says he is still working to understand the impact on rural hospitals. (Tom Williams/ CQ Roll Call file photo)

Legislative language to restrict hospital billing rates in outpatient clinics continues to divide lawmakers as they try to coalesce around a broader health care package, with concerns about rural hospitals stalling progress in the Senate.

The language is aimed at preventing hospitals from buying up independent physician practices and then billing for the same services at a higher rate. Critics allege the practice unnecessarily increases costs, while hospitals argue their own costs are higher.

Some so-called “site-neutral” policies are included in every major piece of health care legislation moving through the committees of jurisdiction, with the exception of legislation from the Senate Finance Committee. Finance Chair Ron Wyden, D-Ore., said he’s still working to understand how the policy would impact rural hospitals.

“I’m not sure anybody has answered those questions,” he said. 

But Mark Miller, former executive director of the Medicare Payment Advisory Commission and current executive vice president of health care for philanthropy and advocacy organization Arnold Ventures, said the vast majority of rural facilities would be unaffected by the policy. 

Most rural hospitals are designated “critical access” with separate Medicare payment rates. Any additional aid is better spent directly on struggling hospitals, he added. Plus, lawmakers can also carve out rural hospitals if they choose.

“If there’s concern about rural,” he said, “exempt them.”

Time is running out if lawmakers want to attach a health care package to a spending bill. Short-term government funding will expire on March 1 and March 8. 

Both Wyden and Senate Finance ranking member Michael D. Crapo, R-Idaho, expressed their support for the policy during a markup in November, when Sen. Maggie Hassan, D-N.H., offered — but withdrew — a site-neutral bill she co-sponsors with Sen. Mike Braun, R-Ind., as an amendment to the committee’s mental health and pharmacy benefit manager bill. 

“There’s credible evidence of this issue, and it leads to higher costs and you don’t get better outcomes so you get kind of a double whammy,” Wyden said. 

“This is one of those issues I mentioned earlier that we need to get done,” Crapo added.

Senate Health, Education, Labor and Pensions Chairman Bernie Sanders, I-Vt., supports site-neutral policies. Sanders negotiated a bill with Sen. Roger Marshall, R-Kan., that would ban facility fees for telehealth and primary care visits and require off-campus hospital departments to use a separate billing number. 

HELP Committee ranking member Bill Cassidy, R-La., also confirmed that he is working on site-neutral policies of his own, potentially adding another layer of complexity to negotiations around the broader health care package.

One of the allures of site-neutral policies is its promise as a way to pay for other priorities, including a delay to cuts that are slated to take effect for hospitals that serve large numbers of Medicaid patients. The Congressional Budget Office and Joint Committee on Taxation estimate that requiring site neutrality for outpatient drug administration services and changes to billing requirements would save $4.2 billion between 2024 and 2033.

But on the House side, Ways and Means ranking member Richard E. Neal, D-Mass., is actively working to pull the language from negotiations. Neal and nearly all of the committee Democrats voted against a broader price transparency bill that included language requiring site-neutral payments for drug administration services in outpatient settings in December when the bill passed the House. 

“It harms hospitals unduly,” said Rep. Mike Thompson, D-Calif. “Hospitals in my district, and I can’t imagine it’s any different in anybody else’s district.”

But some Democrats pointed to the bill’s lack of language addressing transparency in both Medicare Advantage pricing and private equity ownership of providers as the larger reason for opposing the bill.

“We were really concerned that it was supposed to be about transparency,” said Judy Chu, D-Calif. “But it didn’t really address private equity, Medicare Advantage.” 

The hospital industry is marshaling its forces against the legislation. The American Hospital Association launched a new seven-figure national television and digital ad campaign in early January warning about the potential impacts of site-neutral policies on hospitals in rural and underserved communities. 

AHA has shared materials with members claiming that rural Medicare beneficiaries are more likely to seek services from a hospital outpatient department than a physician’s office. 

Jason Kleinman, director of federal relations at the AHA, noted that several members of the Senate Finance Committee represent rural states. 

“So I think they’re taking a much more careful and measured approach to this issue.” 

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