Site-neutral payment for routine services could save commercial purchasers and patients billions.

Introduction: Medicare and commercial payers pay more for services delivered in hospital outpatient departments than in physicians' offices or ambulatory surgery centers. These "site-of-care" payment differentials contribute to rising health care spending and drive hospital acquisition of physician practices. Because many non-hospital settings can provide equivalent or higher-quality care at lower costs, site-neutral payment has gained traction in Medicare, with the potential to save patients and taxpayers billions. A growing number of states are exploring similar policies in the commercial market by capping payments for routine services at a percentage of the Medicare payment in non-hospital settings. The impact of such policies for commercial purchasers and patients has not yet been modeled. Methods: This study uses 2022 commercial claims data from the Health Care Cost Institute and estimates potential savings by capping prices for 2561 routine services (Current Procedural Terminology codes) at 150% of the Medicare payment in hospital, office, and ambulatory surgery center settings. Results: Site-neutral payment for commercial purchasers and patients could save $10.8 billion across 48 states and Washington, D.C. State level aggregate hospital operating margins would decline modestly. Conclusion: Site-neutral policies could yield substantial savings but require ongoing monitoring for unintended effects.