Across the Medicare program, reimbursement rates vary significantly based on site of service and not the healthcare service provided. The Administration, the Medicare Payment Advisory Commission (MedPAC) and bipartisan lawmakers have all recommended site neutral payment reforms to reduce Medicare spending.

In its March 2015 Report to Congress, MedPAC recommended site neutral payments for certain select conditions between two post-acute care sectors: skilled nursing facilities and inpatient rehabilitation facilities. According to MedPAC, Medicare often pays different amounts for similar services across sectors. Site neutral payments that base the payment rate on the less costly sector can save money for Medicare, reduce cost sharing for beneficiaries, and reduce the incentive to provide services in the higher paid sector, without compromising beneficiary access to care or health outcomes.

In 2013, MedPAC also identified 66 groups of services provided in outpatient departments and freestanding offices that meet the Commission’s principles for aligning payment rates across settings. Within each group, the services are frequently performed in physicians’ offices, which indicates that they are likely safe and appropriate to provide in a freestanding office.

For the administration of chemotherapy drugs, for example, the payment to a hospital outpatient facility is nearly three times the rate paid to a community cancer clinic ($136 vs $390). A December 2015 Government Accountability Office (GAO) study found that in 2013, the total Medicare payment rate for a mid-level office visit for an established patient was $51 higher when the service was performed in an HOPD instead of a freestanding physician’s office.