LUGPA Policy Alert - New Advocacy Efforts on Site Neutrality Reform

December 2024 

In response to a new effort in the Senate, LUGPA formally expressed our support for advancing site neutrality in Medicare through a letter addressed to Senators Bill Cassidy and Maggie Hassan. Both senators have been vocal proponents of site-neutral payment policies, as reflected in their recently published white paper. LUGPA’s letter reinforces our commitment to these reforms, highlighting the need for policies that eliminate costly payment differentials between hospitals and physician-owned practices.

The hospital acquisition of physician practices continues to push care into high-cost hospital outpatient settings, driving up expenses for both Medicare and patients. Current policies often allow hospitals to bill for services at a much higher rate than independent practices for identical services, a trend that burdens taxpayers, encourages healthcare consolidation, and limits patient access.

Key Recommendations in LUGPA’s Letter

LUGPA’s letter to Senators Cassidy and Hassan outlines the following priorities to address these disparities:

1. Expand Site Neutral Payments for Off-Campus HOPDs
• LUGPA supports extending site-neutral payment policies to all off-campus hospital outpatient departments (HOPDs). Many off-campus HOPDs are previously independent physician practices now owned by hospitals, which enables them to bill at elevated HOPD rates for the same services that could be delivered at a lower cost in independent settings.
• The 2015 Bipartisan Budget Act mandated hospital-acquired practices to bill at physician office rates, but enforcement has been inconsistent. We urge Congress to prioritize a tracking provision to ensure compliance and extend site-neutral payment policies to all off-campus HOPDs, including grandfathered locations.
• Additionally, acquired practices should be disqualified from accessing 340B drug pricing to prevent further consolidation and cost increases by hospital systems.
2. Implement Site-Neutral Policies for Common Outpatient Procedures
• Narrowing Payment Differentials: Rather than simply reducing HOPD payments, we recommend a balanced “carrot and stick” approach that includes a modest decrease in HOPD payments and a modest increase in office-based and ASC payments. For instance, payments for drug administration could be adjusted to encourage more cost-effective care in physician offices.
• Adopt a Majority Volume Rule for Site Neutrality Triggers: LUGPA supports using a majority volume rule to determine site-neutral payments, which would reduce excessive cuts to ASCs and support the long-term viability of lower-cost, independent care settings.

LUGPA’s letter thanks Senators Cassidy and Hassan for their leadership. It emphasizes our commitment to collaborate on these policies to improve competition, efficiency, and patient access within Medicare. For members, these reforms represent an essential step toward securing sustainable, fair payment structures that support independent practices and reduce patient expenses.

LUGPA will continue working with policymakers to advocate for these essential changes and update members as we progress.