Mandatory Spending
Function 570 - Medicare
Reduce Payments for Hospital Outpatient Departments
CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.
Billions of dollars | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2025– | 2025– | |
Change in outlays | |||||||||||||
Pay site-neutral rates for most services to all off-campus and on-campus HOPDs | 0 | -7.4 | -12.5 | -14.4 | -14.6 | -16.9 | -18.9 | -21.0 | -24.8 | -26.4 | -48.9 | -156.9 | |
Apply site-neutral rates to drug administration services for all off-campus HOPDs | 0 | -0.3 | -0.4 | -0.5 | -0.5 | -0.6 | -0.7 | -0.8 | -0.9 | -0.9 | -1.7 | -5.6 | |
Apply site-neutral rates to imaging services for all off-campus HOPDs | 0 | -0.4 | -0.6 | -0.7 | -0.7 | -0.8 | -0.9 | -1.0 | -1.2 | -1.3 | -2.4 | -7.6 | |
This option would take effect in January 2026.
HOPD = hospital outpatient department.
Medicare beneficiaries receive a wide range of services in hospital outpatient departments (HOPDs). Medicare's payments for services received in HOPDs are generally higher than payments for services received in physicians' offices, even when those services are almost identical. Under the Bipartisan Budget Act of 2015, Medicare lowered payments for newly established off-campus HOPDs. (Off-campus HOPDs are financially integrated with a hospital but are located away from the hospital's main campus.) Off-campus HOPDs that were billing Medicare before November 2015 were exempt from the policy change. Those lower payments, referred to as site-neutral payments, are 60 percent lower than typical hospital outpatient rates and are intended to make Medicare payments for services in HOPDs comparable to payments for similar services provided in physicians' offices.
This option includes three alternatives. The first alternative would apply site-neutral payments to both off-campus and on-campus HOPDs for services that are commonly supplied in physicians' offices. The second alternative would apply site-neutral payments to all off-campus HOPDs for drug administration services. The third alternative would apply site-neutral rates to all off-campus HOPDs for imaging services.