The Centers for Medicare & Medicaid Services (CMS) has proposed a new rule aimed at reducing costs for Medicare beneficiaries. This involves cutting a payment disparity that results in higher charges for patients depending on the service location. As part of the 2027 outpatient payment rule, the CMS proposal seeks to expand ‘site-neutral’ payments for imaging services, such as standard X-rays, CT scans, and MRI scans, delivered at hospital-owned outpatient facilities.

Potential Savings

According to CMS, this change in policy could reduce beneficiary cost-sharing by around $70 million in 2027, while potentially lowering Medicare spending by approximately $260 million. Historically, higher payments for outpatient services at hospital-owned facilities have led to increased coinsurance costs for beneficiaries. CMS believes site-neutral payments will address this issue.

Understanding Site-Neutral Payments

CMS intends to ensure that Medicare beneficiaries do not face higher costs based solely on where they receive care. This proposal builds on existing policies applying to some clinic visits and drug-administration services in off-campus hospital outpatient departments. For the year 2027, CMS suggests including imaging services like X-rays, CT scans, and MRIs under this policy.

“The decision to go with site-neutral payments is Medicare declaring the same service should not cost more just because it happens inside a hospital-owned outpatient department,” said Alex Beene, a financial literacy instructor.

Implications of the Proposal

For seniors, this could mean lower coinsurance and reduced financial pressure on Medicare for expensive outpatient treatments. However, there is concern about hospitals, particularly in rural areas, cutting services due to financial constraints. Rather than the higher hospital outpatient rate, Medicare would compensate services at a rate similar to what would be paid under the physician fee schedule, with an exemption for Rural Sole Community Hospitals.

“This cost-cutting proposal aims to encourage competition,” said Kevin Thompson, CEO of 9i Capital Group.

Impact on Beneficiaries

Beneficiaries would save money through decreased coinsurance. Medicare patients typically cover a portion of approved costs for outpatient services. When higher payments occur at hospital facilities, patient costs increase. By standardizing payments, beneficiaries would owe less for imaging procedures in such settings.

“A beneficiary could see a lower bill for imaging,” noted Michael Ryan, founder of MichaelRyanMoney.com.

• Medicare Part B savings of about $190 million in 2027.
• Reduced beneficiary premiums of about $70 million.
• Lower beneficiary cost-sharing of about $70 million.

The proposal ensures beneficiaries pay no more simply due to the hospital-owned facility setting. CMS and other stakeholders are evaluating the rule in regard to its future impact.

Future Prospects

The potential savings per beneficiary remain uncertain, but those using hospital-owned facility imaging services may experience the most significant savings. Despite some opposition from hospitals citing additional operational costs, there is a higher likelihood of the rule being finalized due to prior similar policy adoptions. However, broader reform faces challenges, as balancing cost with access concerns remains critical.

The CMS will review public comments before issuing the final rule for 2027. Should the proposal take effect, adjustments will apply to certain off-campus hospital outpatient department services.