Action Needed: ‘Site Neutral’ Payments Would Hurt Hospitals with High Medicare Populations

March 10, 2015

To: CEOs, CFOs, and Government Relations Staff of Impacted Hospitals

By April 1, Congress must act to prevent the Medicare physician payment cut from going into effect.  During these budget negotiations, payments for hospital care are again at risk as a potential offset to pay for legislation to avoid the scheduled cut to physicians. One of the top ideas to pay for the physician fix includes implementing so-called “site neutral’ payment policies. If adopted by Congress, the proposal would reduce Medicare payments to Washington hospitals by nearly $1 billion over the next 10 years for PPS hospitals. These budget negotiations are occurring now!

Action: In the next couple days, contact U.S. Senators Murray and Cantwell and your Representative(s) to urge them not to vote for any deal that uses hospital cuts to pay for the physician fix. Explain to them what these cuts would mean to your patients and hospital.

Impact of Site Neutral Cuts

The impact of these cuts are substantial for many Washington hospitals and health systems. Click here to view the proposed cuts to your hospital.

Contact Your Senators and Representative Today!
WSHA recommends sending your request to the Senators’ staffers below:

Senator Murray

Senator Cantwell

Representative Contact Information

Please click here for a directory of Congressional staff. Send your messages to the Chief of Staff and the Health Legislative Aide. Please let Chelene Whiteaker ( know when you make contact and what you hear back from them.


In the next few weeks, we know Congress will once again debate how to pay for the Medicare physician fee cut, scheduled to take effect on April 1. I am writing to express my concern about using hospital payments as a source to pay to fix that cut. Specifically, my hospital opposes using so-called “site neutral” payment policies. In Washington State, implementing these policies would result in a cut of nearly $1 billion over 10 years, on top of the cuts hospitals are already taking through the Affordable Care Act, sequestration, and other recent budget reductions. For my hospital, the cut means $xxx,xxx (cut-and-paste your dollar amount from the proposed cuts link) over 10 years, if the possible site-neutral policies are adopted.

As safety net providers, hospital-based clinics serve high numbers of Medicare and Medicaid patients, treat patients with more acute and complex health conditions, and have higher costs than freestanding physician offices.  In return, Medicare pays both a facility fee and a physician payment. The proposal to cut hospitals would cap payments at the rate paid to freestanding physicians or ambulatory surgical centers. This proposal fails to recognize that “site neutral” payments do not reflect the fact that hospital outpatient departments have higher costs due to the complexity of their patients and greater regulatory requirements.

A recent report shared by the American Hospital Association clearly shows that patients of hospital outpatient departments have more chronic conditions, are more racially diverse, and are significantly more likely to be charity care or on Medicaid than their freestanding physician counterparts. Making these cuts could limit access to care for these patients.

I urge you to oppose any so-called “site neutral” payment policies for hospitals. I am happy to answer any questions you may have on this issue.


The “site-neutral” payment policy was recommended by MedPAC. The proposed cut has been contained in the President’s budget for several consecutive years. This policy would impact PPS hospitals that care for many Medicare patients. Over 10 years, the proposed cuts would:

  • Pay hospital outpatient departments for evaluation and management services at the physician fee schedule (nearly $600 million cut);
  • Cap outpatient department payment for 66 ambulatory payment classifications to the physician fee schedule rate ($250 million cut); and
  • Cap outpatient department payments for 12 proposed services at the ambulatory surgery center rate ($133 million cut).


For questions, please contact Chelene Whiteaker, Policy Director at or 206-216-2545.



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