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


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



Policy Alert: FTC Votes to Release Final Rule Banning Most Non-Compete Agreements - April 2024 

LUGPA Policy Update: Promoting Payment Parity and Competition in Urology Care -  March 2024 

LUGPA Policy Brief: Prohibiting Copay Accumulators -  March 2024

LUGPA Policy Update - 2024 Medicare Physician Payment Cuts  (Jan 2024)

Important Updates on CMS PFS Final Rule 2024 (Dec 2023)

The Lower Costs, More Transparency Act (Dec 2023)

LUGPA Policy Brief: The Modernizing and Ensuring PBM Accountability (MEPA) Act  - Nov. 2023 

Policy Brief: Sustaining the Health Care Workforce and Supporting Provider Well-Being - Aug. 2023

LUGPA Policy Update: Site-Neutral Payment Reform - June 2023

LUGPA Policy Brief: Hospital Consolidation, Mergers, and Acquisitions - June 2023

LUGPA Victory: SCOTUS Ruling regarding Site-neutral Payments - June 28, 2021 

Court Upholds 340B Hospitals' Medicare Part B Drug Reimbursement Cuts - July 31, 2020 

Court Victory for Independent Medicine in Fight for Site-Neutral Payments - July 2020

LUGPA Escalates its Fight for Site-Neutral Payments - February, 2020

Court Reverses 340B Reimbursement Cut – January 30, 2019

LUGPA Comments to CMS on Hospital Outpatient Prospective Payment System (“OPPS”) and Ambulatory Surgery Center (“ASC”) Payment System Final Rule for 2019 – January 2, 2019

Consumers Worry About Hospital Mergers – December 6, 2018

Physician Practice Roundup—Study finds Americans concerned about hospitals acquiring independent practices – December 4, 2018

Hospital mergers seen as threat to affordable care, most U.S. survey respondents say – December 4, 2018

Americans concerned about how hospital mergers and acquisitions will impact their care – December 3, 2018

New Study Shows Americans Are Concerned About How Hospital Mergers and Acquisitions Will Impact Their Care – November 28, 2018

LUGPA Comments to CMS on Medicare Physician Fee Schedule and Quality Payment Program for Calendar Year 2019 – September 10, 2018

Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Short Inpatient Hospital Stays; Transition for Certain Medicare-Dependent, Small Rural Hospitals Under the Hospital Inpatient Payment System; CY 2016 Proposed Rule (CMS-1633-P) – August 31, 2015

Physician Fee Schedule CY 2014 proposed rule (CMS-1600-P) – September 6, 2013