The Centers for Medicare & Medicaid Services (CMS) introduced a new Medicare proposal aiming to reduce costs for certain beneficiaries by tackling a payment imbalance. This payment disparity often leads patients to pay more for the same service depending on the location where they receive it. The proposal is part of CMS’s 2027 outpatient payment rule and seeks to expand ‘site-neutral’ payments for specific imaging services at hospital-owned outpatient facilities, including X-rays, CT scans, and MRI scans.
Estimated Savings
CMS projects that this change could reduce beneficiary cost-sharing by approximately $70 million in 2027. It also predicts a reduction in Medicare spending by roughly $260 million.
Why It Matters
Historically, Medicare has paid higher rates when outpatient services occur in a hospital-owned outpatient department than in a physician’s office or an ambulatory surgery center. Higher payments typically result in increased coinsurance costs for beneficiaries.
Key Information
According to CMS, this proposal ensures that beneficiaries are protected from higher premiums and cost-sharing based on the care’s location. The proposed rule extends an existing policy, previously covering clinic visits and drug administration services at off-campus hospital outpatient departments, to include specific imaging services performed without contrast. These services include X-rays, CT scans, and MRIs.
Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, emphasized that the move towards site-neutral payments ensures that the cost of a service should not vary dramatically based on the location—be it a hospital-owned outpatient department or a traditional doctor’s office. For seniors, this could mean lower coinsurance and reduced pressure on Medicare finances.
Implementation Considerations
Instead of the higher hospital outpatient rate, Medicare would pay for these services at amounts comparable to the physician fee schedule. Rural Sole Community Hospitals would be exempt from this policy. Kevin Thompson, CEO of 9i Capital Group, noted that this proposal promotes competition as hospitals have expanded by acquiring independent physician practices, which reduces competition.
Patient Savings
The potential savings for patients come from reduced coinsurance fees. Traditional Medicare patients generally pay a percentage of approved amounts for outpatient services. When Medicare pays more for hospital-owned facility services, patient shares increase. Reducing these payment differences could lower out-of-pocket costs for imaging procedures at specified locations.
Michael Ryan, a finance expert, highlighted that beneficiaries could see lower bills for imaging, potentially saving hundreds of dollars over time, especially for those needing frequent imaging services.
- Approximately $190 million in Medicare Part B savings in 2027
- Approximately $70 million in reduced beneficiary premiums
- Approximately $70 million in lower beneficiary cost-sharing obligations
Average Savings for Beneficiaries
While the CMS estimates lower beneficiary cost-sharing and premiums in 2027, the average savings per individual remain unclear. Beneficiaries receiving imaging services at hospital-owned facilities are expected to see the most direct savings.
Potential for Implementation
On July 2, CMS released the proposal as part of its outpatient payment rule for 2027. Public comments will be collected before finalizing the rule. Given CMS’s past adoption of similar site-neutral payment policies, this rule has a higher likelihood of finalization. However, hospitals traditionally oppose broader site-neutral payment expansions, citing additional costs that physician offices do not face. Broader reforms may encounter challenges as hospitals advocate for changes, requiring Congress to balance lower patient costs with access to care in vulnerable areas.
Next Steps
CMS will review public comments on the proposed rule before issuing a final version for 2027. If finalized, the changes in imaging payments would be effective in 2027, applicable to certain services in off-campus hospital outpatient departments.