CMS Proposes Changes to Medicare Payment Rules

The Centers for Medicare & Medicaid Services (CMS) has announced a proposal that could lower costs for certain Medicare beneficiaries. This involves addressing a payment disparity that currently leads to higher charges based on the service location. The proposal is part of CMS’s 2027 outpatient payment regulation and seeks to expand “site-neutral” payments for imaging services provided at hospital-owned outpatient facilities. This includes various imaging services such as X-rays, CT, and MRI scans.

Potential Savings

CMS estimates this change could reduce beneficiary cost-sharing obligations by approximately $70 million in 2027 alone, while also lowering Medicare spending by around $260 million. This is significant because Medicare often pays more when outpatient services occur in hospital-owned departments compared to a physician’s office or ambulatory surgery center. Such higher payments result in increased coinsurance costs for beneficiaries.

Key Elements to Know

The CMS proposal aims to prevent beneficiaries from incurring extra costs purely based on the treatment location. It plans to broaden an existing policy currently applied to some clinic visits and drug-administration services in certain off-campus hospital outpatient departments. For 2027, the expansion will include imaging services like X-rays, CT, and MRI scans performed without contrast at these facilities. Under the new rule, Medicare would no longer pay higher rates for these services if they occur in hospital-owned departments.

“The decision to go with site-neutral payments is Medicare declaring the same service should not cost dramatically more just because it happens inside a hospital-owned outpatient department instead of a traditional doctor’s office,” said Alex Beene, a financial literacy instructor at the University of Tennessee at Martin.

Impact on Patients

Patients could save money through reduced coinsurance obligations. Typically, Medicare beneficiaries pay a portion of the approved amount for many outpatient services. Higher payments for hospital outpatient services lead to an increased patient share. Adjusting these payments would lower beneficiaries’ out-of-pocket expenses for covered imaging procedures.

Michael Ryan, a finance expert and founder of MichaelRyanMoney.com, noted that over time, patients using these services repeatedly could save hundreds of dollars.

• Approximately $190 million in Medicare Part B savings is expected in 2027.
• An estimated $70 million in reduced beneficiary premiums.
• About $70 million in lower beneficiary cost-sharing obligations.

Average Savings

While CMS predicts a total of $70 million in reduced premiums and $70 million in lower cost-sharing for 2027, the exact average savings per beneficiary remains uncertain. However, those receiving imaging services at hospital-owned outpatient facilities are anticipated to experience the most savings.

Kevin Thompson, CEO of 9i Capital Group, commented, “Hospitals have grown larger by acquiring independent physician practices, reducing competition along the way.”

Implementation Prospects

The proposal was announced as part of the 2027 outpatient payment rule on July 2. CMS will gather public comments before issuing the final rule. Given CMS’s history of adopting site-neutral payment policies for other services, the likelihood of this proposal being finalized is higher. However, hospitals have typically resisted such reforms, arguing they face different costs than physician offices.

Alex Beene remarked, “Broader site-neutral reform could be more difficult, as hospitals can still advocate for changes, and Congress will have to balance lower patient costs with access concerns in vulnerable communities.”

Next Steps

CMS will review public comments on the proposal before issuing a final version for 2027. If approved, the changes would take effect in 2027 for certain services at off-campus hospital outpatient departments.