A proposal to save Medicare nearly $4 billion over a decade is running into stiff opposition.

From hospitals. – and some members of Congress.

Medicare has long paid more for outpatient services provided in hospital-based outpatient departments than it has for the same services delivered in private doctors’ offices.  Critics say this is unfair, that Medicare should pay the same no matter where the service is provided.  Defenders of the practice maintain that hospital-based outpatient departments share higher fixed costs, including for ERs and care for uninsured patients.  They also argue that reducing such Medicare outpatient payments could threaten the financial viability of some physician practices, especially in rural and lower-income urban areas, thereby jeopardizing access to care in such communities.

Disagreement over the issue does not follow party or ideological lines; congressional Democrats and Republicans can be found on both sides of the issue.

ASH has been among the hospital groups rallying against the site-neutral payment proposal, doing so on behalf of community safety-net hospitals most recently late last year in a message to all members of Congress that included the following explanation:

Mission-driven safety-net hospitals such as ours are fundamentally different from the typical American hospital, serving where the need is greatest, not where the revenue potential is most appealing.

Because few physicians find it economically feasible to set up their private practices in underserved communities, community safety-net hospitals accept the responsibility to establish medical practices there: to build, equip, and manage clinics and to hire physicians and other health care practitioners to work in them.

Safety-net hospitals that establish community outpatient clinics give health care providers a reason to choose to work in underserved rural and inner-city communities – and the investment needed to make such clinics possible is funded and then sustained in large part by the payments Medicare makes to hospital-based outpatient departments, which are greater than those Medicare makes to independent medical practices.

Learn more about the battle over site-neutral Medicare outpatient payments and opposition to it from the hospital industry from the KFF Health News article “In Fight Over Medicare Payments, the Hospital Lobby Shows Its Strength.”