The Centers for Medicare & Medicaid Services (CMS) introduced a new proposal aiming to reduce costs for Medicare beneficiaries. This change would address a payment disparity where patients often incur higher expenses for identical services depending on the service location.
Proposal Overview
As part of the 2027 outpatient payment rule, CMS plans to expand “site-neutral” payments for certain imaging services offered at hospital-owned outpatient facilities. This would include X-rays, CT scans, and MRIs.
CMS estimates this change could lower beneficiary cost-sharing by around $70 million in 2027 and reduce overall Medicare spending by about $260 million.
Impact on Beneficiaries
Medicare has historically paid more for outpatient services in hospital-owned departments than in physician’s offices. The result is higher coinsurance costs for Medicare recipients.
The proposed rule aims to prevent beneficiaries from facing increased premiums and cost-sharing due solely to service location.
Details of the Proposal
Under the new rule, CMS would extend an existing policy that applies to some clinic visits and drug services. The 2027 policy would include non-contrast imaging services like X-rays, CT scans, and MRIs in specific settings.
Medicare would pay these services at a rate similar to that of the physician fee schedule instead of the hospital outpatient rate. Rural Sole Community Hospitals would be exempt.
Financial Implications
“The decision to go with site-neutral payments signifies Medicare’s position that the same service should not be priced higher just because it occurs in a hospital-owned outpatient department,” Alex Beene, a financial literacy instructor, commented.
For seniors, this could mean reduced coinsurance and less strain on Medicare finances, particularly for high-cost treatments.
Kevin Thompson, CEO of 9i Capital Group, noted that hospital acquisitions of independent practices reduce competition. This proposal champions competition by ensuring costs align across service locations.
Potential Savings
Traditional Medicare patients pay a portion of the approved cost for outpatient services. Higher payment rates at hospital-owned facilities increase this share.
By minimizing these disparities, the proposal would lower out-of-pocket costs for covered imaging procedures.
Expert Michael Ryan highlighted that beneficiaries using these services regularly could save hundreds over time.
- Approximately $190 million in Medicare Part B savings for 2027.
- Around $70 million in reduced beneficiary premiums.
- Estimated $70 million in lower beneficiary cost-sharing.
The policy aims to avoid beneficiaries incurring more expenses due to the service location.
Implementation Prospects
CMS released this proposal as part of its 2027 outpatient payment rule in July. Public comments are now being collected before finalizing the rule.
Similar site-neutral policies have been adopted, increasing the likelihood of adoption. However, hospital resistance could pose challenges, as they face costs physician offices do not.
“Broader reform could be tough due to hospital advocacy and concerns about maintaining patient access in vulnerable communities,” Beene explained.
Next Steps
CMS will review public feedback before releasing a final version of the rule for 2027. If approved, the changes would impact services in certain hospital outpatient departments.
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