In most states, payment rates that vary by site-of-service incentivize performing care in high-cost hospital outpatient departments (HOPDs) rather than lower-cost physician offices and ambulatory surgical centers (ASCs). The alternative payment system used in Maryland reverses these incentives. Comparing site-of-service patterns nationwide to those in Maryland allows for estimation of the impacts of payment differentials.
- Across the services MedPAC has suggested for site-neutral payment reform, the share provided in HOPDs was 10 percentage points higher nationwide than in Maryland in 2024, and this gap has grown from 7 percentage points in 2017. Maryland’s experience offers a directional benchmark for a lower-cost pattern of care achieved without adverse outcomes.
- Between 2017 and 2024, HOPD utilization of certain services increased nationwide and decreased in Maryland. For example, the HOPD share of drug administration increased nationally from 37% to 39% while falling in Maryland from 26% to 23%. For other services, such as imaging, HOPD utilization remained flat nationwide yet was lower and continued to decline in Maryland. This divergence suggests that clinical and technological advances have allowed more services to be delivered safely in physician offices and ASCs, but payment differentials have muted this cost-saving progress outside of Maryland.
- We identified 16 additional service categories beyond the widely cited MedPAC list that are performed more frequently in office or ASC settings than in HOPDs in Maryland. These services, which include imaging with contrast and some endovascular procedures, may warrant consideration for site-neutral payment policies.
- CMS recently finalized site-neutral payment for off-campus HOPD drug administration effective in 2026. We project CMS’s expansion of site neutrality for off-campus HOPD drug administration will save $5 billion in federal spending and $3 billion for Medicare beneficiaries over the next decade.
- CMS is considering further expansion of site-neutral payments, and this brief includes our updated savings estimates for expansion scenarios. Including off-campus HOPD imaging would save an additional $6 billion in federal spending and $3 billion for beneficiaries over ten years. Including on-campus HOPD clinic visits would save an additional $24 billion in federal spending and $13 billion for beneficiaries. These amounts represent a small share of potential upper-bound savings from comprehensive site neutrality, which could exceed $200 billion for the federal government and $100 billion for beneficiaries over ten years.
