Pillar 06

Site-Neutral Payments

Payment parity · Hospital outpatient vs. physician office · Medicare

HighCMS extended site-neutral rates twice by rule over FAH's written opposition. Site-neutral is the leading pay-for for a year-end package, and FAH is the main obstacle.

Last verified November 6, 2026

FAH position

FAH opposes every site-neutral expansion. It told CMS in August 2026 that the imaging cut is unlawful and improper and that blunt site-neutral policies ignore hospital cost structures.

Where it stands

Status as of November 2026

November 4, 2026CMS's CY2027 outpatient final rule pays imaging without contrast at excepted off-campus hospital departments at the physician fee schedule rate. That is 40% of the hospital rate, from January 1, 2027. CMS estimates $260 million in first-year savings. FAH's comment opposed the cut for 337 imaging services. source
November 4, 2026The same rule sets a 2.3% outpatient update, removes 637 more services from the inpatient-only list, and raises the 340B remedy offset to 2%. source
November 21, 2025CMS's CY2026 outpatient final rule paid drug administration at excepted off-campus departments at the physician rate from January 1, 2026, not budget neutral. CMS's estimate was $290 million in 2026. source
April 15, 2025Executive Order 14273 directed HHS to propose rules so Medicare payment does not steer drug administration to hospital outpatient departments. The CY2026 rule carried it out. source
June 30, 2026MedPAC repeated in its March and June 2026 reports its recommendation to align payment for 57 ambulatory payment classifications across settings. source
August 4, 2026HFMA reports site-neutral legislation is seen as the most likely health policy change to pass in 2026, as a pay-for in an end-of-year package. No site-neutral bill was marked up in 2026. source
February 17, 2026Hospital-side modeling by FTI Consulting for the Coalition to Strengthen America's Healthcare. It says MedPAC's approach would cut hospital payments $182 billion over ten years and nearly $12 billion in year one. source

Legislation

Bills in the 119th Congress

Bill	Title	Sponsor	Cosponsors	Status
S. 1629	Same Care, Lower Cost Act	Sen. John Kennedy (R-LA)	0	Introduced May 6, 2025; referred to Finance; no action (2025-05-28)

FAH on the record

Letters, comments and statements

September 15, 2025FAH's CY2026 outpatient comment opposes site-neutral payment for drug administration at excepted off-campus departments. It calls the cut deeply flawed and unlawful and demands budget neutrality if finalized. source
July 2, 2026FAH statement on the CY2027 proposed rule objects to accelerated recoupment. Site-neutral is not mentioned by name. source
August 31, 2026FAH's CY2027 outpatient comment, under the heading Do Not Reduce Payment for Imaging Services at Excepted Off-Campus Departments, calls the cut unlawful and improper. It also opposes removing 637 inpatient-only services. source

The evidence

•CRFB, Arnold Ventures and West Health estimated $153 billion in lower Medicare spending for 2021 to 2030 from full site-neutral payment. source
•A Blue Cross Blue Shield Association-commissioned analysis put total savings at $471 billion for 2024 to 2033. That is $231 billion federal, $117 billion in premiums and $152 billion out of pocket. source
•FAH issue page: blunt site-neutral payment policies ignore fundamental functional and cost structure differences between hospitals and physician offices. source
•FAH, December 11, 2023, on House passage of H.R. 5378 by 320 to 71: no time for so-called site neutral Medicare cuts. source
•FAH, November 1, 2024, on the Cassidy-Hassan framework: site-neutral policies threaten access to 24/7 hospital care. source

What it means for physicians

The site-of-service differential is the single biggest reason a hospital can outbid an independent practice for a physician. Every dollar of parity is a dollar the hospital cannot use to buy the office next door. CMS has moved twice by rule. The congressional version, worth up to $153 billion over ten years, is what FAH's lobbying budget is for.

Sources