Medicare Site-Neutral Payments Included in House Energy and Commerce Health Subcommittee Markup

May 22, 2023

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On May 17, the House Energy and Commerce Committee Health Subcommittee held a markup of 17 healthcare bills. In particular, the subcommittee advanced legislation that would implement site-neutral payments under Medicare for drugs administered in off-campus hospital outpatient departments. 

During the markup, the Chair of the Energy and Commerce Committee, Rep. Cathy McMorris Rodgers (R-WA) offered and withdrew an amendment that would enact additional site-neutral payment cuts. She pledged that she would continue to work on site-neutral policies with the ranking member, Rep. Pallone (D-NJ) and other members of the committee to pursue broader site-neutral payment policy in Medicare.

Medicare site-neutral payment policies have become a hotly debated issue in recent years, with the hospital industry largely pushing back at attempts to implement them. Hospital outpatient departments currently receive higher Medicare reimbursement rates for providing medical services compared to physician offices and other ambulatory settings.

Hospitals argue that the policies could threaten patient access to care and that they would place an additional strain on the financial stability of hospitals, many of whom remain under pressure due to lingering COVID-19 financial impacts. They also argue that site-neutral payment policies do not take the increased costs hospitals incur compared to other provider sites into consideration.

In a hearing before the markup there was clear support for site-neutral reforms because such reforms would tamp down on provider consolidation. Proponents of site-neutral payment policies argue that the lack of policies incentivizes hospitals to engage in anti-competitive behavior.