Site Neutral Payment Reform

Hospital systems are paid substantially more than physicians by Medicare for the identical procedures. LUGPA is focused on Capitol Hill and in the Administration through rule-making on leveling the playing field and ensuring that independent physician practices can compete with mega-hospitals and offer more efficient, high quality care in patients’ communities.

In Medicare, hospitals and physicians are paid under two separate and fundamentally unrelated fee schedules, but hospitals have generally been paid more for performing services identical to those performed in physician offices. The recent substantial increase in physician practice acquisition by hospitals has resulted in increased costs to Medicare and commercial payers.

Hospitals vs. Independent Physician Practices

Patients undergoing outpatient procedures have multiple options to access healthcare. The main facility-based options for patients fall into two categories:

Hospital Outpatient Departments (HOPD)	LUGPA Member Practices
Facilities are owned by hospitals and can function within hospital or at off-campus locations	Physician-owned and function as free-standing businesses
Paid under the Outpatient Prospective Payment System (OPPS)	Paid under the physician fee schedule, which is ultimately less than hospital outpatient department (HOPD) payment rates
	Fully identify Medicare Physician Fee Schedule (MPFS)

LUGPA member practices are paid under the physician fee schedule for their professional services, but many groups also own and operate ambulatory surgical centers (ASCs). Facility fees for ASCs average 49 percent of HOPD fees for the identical services, resulting in higher health care costs and increased deductibles for patients when they are treated in HOPDs.

Download the LUGPA Site Neutral Payments Brief

WHAT ARE LUGPA’S GOALS?

LUGPA’s Health Policy and Political Affairs Committees have continued to engage Congress to address this issue by:

1. Building on site-of-service reforms, so that Medicare pays the same amount for the identical service regardless of where it is performed or when a practice was acquired	3. Pushing for reform of the 340B drug discount program so that it benefits uninsured and indigent patients, not mega-hospital systems
2. Promoting reform of the Stark self-referral laws to allow more coordination of care by physician practices and strengthen integrated practices as an important competitive counterweight to mega-hospital systems	4. Promoting more aggressive FTC enforcement of anti-competitive provider mergers and acquisitions