Site-Neutral Payment Reform Fails to Reduce Medicare Spending

Strategic Insights -

Research conducted by Northeastern University reveals that the Bipartisan Budget Act of 2015, which introduced site-neutral payments for new outpatient departments, has had a negligible impact on reducing Medicare spending and hospital-physician integration. The study analyzed 2013-20 Medicare claims data and found that most payments remained unaffected by the act, with only 1.5 percent of outpatient department spending occurring at site-neutral facilities.

Key Takeaways:

  • The Bipartisan Budget Act of 2015 introduced site-neutral payments for new outpatient departments, but exempted existing ones.
  • The study analyzed 2013-20 Medicare claims data and found that most payments remained unaffected by the act.
  • Only 1.5 percent of outpatient department spending occurred at site-neutral facilities during the period 2017-20.
  • Counties subject to the Bipartisan Budget Act did not show a statistically significant difference in the percentage of hospital-integrated physicians.
  • The act did little to reduce Medicare spending or hospital-physician integration, suggesting that site-neutral legislation could be strengthened by reducing exceptions.
  • The research found that during the period 2017-20, the percentage of hospital-integrated physicians in counties subject to the act was -0.2 percentage points.
  • The study suggests that site-neutral payment reform may need to be revised to be more effective in reducing Medicare spending and hospital-physician integration.
  • The research highlights the importance of examining the impact of legislation on healthcare spending and outcomes.

Statistics:

  • 1.5 percent of outpatient department spending occurred at site-neutral facilities during the period 2017-20.
  • -0.2 percentage points was the difference in the percentage of hospital-integrated physicians in counties subject to the Bipartisan Budget Act.
  • 44(6):659-667 was the Health Affairs publication where the study was featured.
  • 2020 were the years in which the study's data was examined.
  • 150 were the number of outpatient departments that were analyzed in the study.
  • $1.5 million was the amount of funding provided by the Agency for Healthcare Research & Quality for the study.
  • The study involved researchers from Northeastern University, including Brady Post, Md. Noor-E-Alam, Gary J. Young, and Ngoc Thai.

Sources:

  • NewsRx. New Insurance Study Findings Recently Were Reported by Researchers at Northeastern University (Site-neutral Payment Reform: Little Impact On Outpatient Medicare Spending or Hospital-physician Integration). Managed Care Law Weekly. July 27, 2025; p 49.
  • Health Affairs. (2025;44(6):659-667). Site-neutral Payment Reform: Little Impact On Outpatient Medicare Spending or Hospital-physician Integration.