Medicare’s Proposed Rule to Expand Site-Neutral Payments for Imaging Services

The Centers for Medicare & Medicaid Services (CMS) has introduced a proposal aimed at reducing costs for Medicare beneficiaries. This proposal targets a long-standing payment disparity causing patients to pay more based on the service location. It is part of CMS’s 2027 outpatient payment rule, expanding ‘site-neutral’ payments for specific imaging services offered at hospital-owned outpatient facilities. These services include standard X-rays, CT scans, and MRI scans.

Financial Implications

The CMS estimates this change will reduce beneficiary cost-sharing by approximately $70 million in 2027 while lowering Medicare spending by about $260 million.

Reasons Behind the Proposal

Historically, Medicare has paid more for outpatient services conducted at hospital-owned departments compared to those performed in a physician’s office or ambulatory surgery center. This discrepancy has often resulted in higher coinsurance costs for beneficiaries.

The CMS proposal aims to prevent patients from facing higher costs solely due to the service location. The rule expands an existing policy that applies to certain clinic visits and drug-administration services at off-campus hospital outpatient departments. For 2027, imaging services without contrast conducted in these settings will be included.

Expert Insights

“The decision to go with site-neutral payments is Medicare declaring the same service should not cost dramatically more just because it happens inside a hospital-owned outpatient department instead of a traditional doctor’s office,” says Alex Beene, a financial literacy instructor.

This change holds potential benefits for seniors, such as lowering coinsurance and lessening the financial strain on Medicare’s budget.

Potential Concerns

Some concerns surround whether the financial pressure might lead hospitals, especially in rural areas, to cut services they consider financially unsustainable. While Medicare aims to pay for services at rates similar to the physician fee schedule, Rural Sole Community Hospitals are exempt from this policy.

“Hospitals have grown larger by acquiring independent physician practices, reducing competition along the way,” says Kevin Thompson, CEO of 9i Capital Group.

Patients should remain aware of these changes, as the independent practices they visit may become part of larger hospital systems.

How Patients Benefit

Savings would result from reduced coinsurance obligations. Traditional Medicare patients typically pay a percentage of the approved amount for many outpatient services. Costs increase when services are offered at hospital-owned outpatient facilities, but reducing payment differences will lower out-of-pocket expenses for services in these settings.

“A beneficiary could see a lower bill for imaging,” notes Michael Ryan, a finance expert and founder of MichaelRyanMoney.com. “Over time, it could mean hundreds of dollars saved for people who use these services repeatedly.”

The CMS projects about $190 million in Medicare Part B savings, $70 million in reduced beneficiary premiums, and $70 million in lower cost-sharing obligations for 2027.

Average Savings

While CMS estimates $70 million in cost-sharing reductions and $70 million in decreased premiums, individual beneficiary savings remain unclear. Those obtaining imaging services at hospital-owned outpatient facilities might see the most significant savings.

Implementation Likelihood

CMS unveiled the new proposal as a part of its 2027 outpatient payment rule. The agency will gather public feedback before finalizing the rule. With similar site-neutral payment policies already in place for clinic visits and drug-administration services, the proposal has a strong chance of being finalized.

Nonetheless, hospital systems have opposed this due to extra costs they incur compared to physician offices, highlighting potential challenges for broader site-neutral legislation.

Next Steps

CMS will consider public comments on the proposal before finalizing a rule for 2027. If approved, the changes will apply to some imaging services in off-campus hospital outpatient departments starting that year.