The battle over site-neutral payments
February 18, 2024
Should the same service be compensated differently if performed in a clinic versus in a hospital? Hospitals think that services performed in their facilities should be compensated more, and they have been receiving higher payments for many years. KFF Health News published an article that gives an overview of some recent legislative efforts to even out the payments (known as site-neutral payments, since under this arrangement, the payment amount should not vary depending on the facility in which the service is rendered).
Hospitals have argued that keeping their facilities open is very costly. Additionally, since they must be willing to accept emergencies, they need to staff for a certain patient volume, even if that patient volume does not materialize. To cover these costs, hospitals have relied on higher payments for the same services that can be performed at clinics. With a quick glance, the logic presented by hospitals might be plausible, but hospitals expect higher payments even for services rendered at clinics that they have bought. Instead, a more fair compensation scheme should equalize the payments for services, regardless of facility, and hospitals who provide emergency medical care should probably be paid a fixed amount every month. Under the current arrangement, hospitals generate more income and can use that income to buy out clinics, further increasing the cost of medical care.