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New Chart Shows State-Level Impacts of Site Neutrality

See state-level data to help determine payment policies for drug administration at off-campus hospital outpatient departments.

Last year, the House of Representatives passed the Lower Costs, More Transparency Act, which would legislate that Medicare expand site neutrality rules to include drug administration at all off-campus hospital outpatient departments (HOPDs). Recent policy briefs by Actuarial Research Corporation (ARC): Potential Impacts of Medicare Site Neutrality on Off-Campus Drug Administration Costs and Sizing Medicare Off-Campus Hospital Outpatient Department Site Neutrality Proposals discuss existing site neutrality requirements and the projected impacts of expanding.

Building on ARC’s modeling, the table below provides state-level data that may be considered in determining payment policies for drug administration at off-campus HOPDs.1 The table columns are organized into three sections:

  • Section 1 contains ten-year projected aggregate beneficiary cost sharing savings, totaling $540.7 million. These savings are projected to materialize through 2033 and reflect the effective dates and multiyear phase-in included in the Lower Costs, More Transparency Act.
  • Section 2 contains information on the annual number of beneficiaries who would be impacted and how much those impacted beneficiaries would save in cost sharing payments. Drug administration site neutrality is particularly meaningful to beneficiaries undergoing chemotherapy at off-campus HOPDs, and ARC estimates average per beneficiary cost sharing savings of $277 per year for those beneficiaries.2 3
  • Section 3 shows the impact of site neutrality of drug administration services at off-campus HOPDs relative to total Medicare HOPD spending. This section includes two comparisons – the first for all facilities and the second for those that are rurally based. Off-campus site neutrality rules have less of an impact in rural areas because many rural facilities are not paid under the outpatient prospective payment system (OPPS) and because rurally-based hospitals are less likely to have associated off-campus HOPDs.4

Read our table here.

  1. 1

    Projections are based on ARC’s site neutrality simulation model. Model baseline data is the 2022 Medicare 5% sample Limited Data Set, extrapolated to 100% Medicare Fee-for-Service. Projections are calibrated to the CMS 2023 National Health Expenditure Accounts projection. Data in this post reflects modifications to modeling supporting ARC’s January 3, 2024 brief to reflect the phase-in schedule of the Lower Costs, More Transparency Act. Impacts by state are based on beneficiary residence.

  2. 2

    Annual impacts are based on 2022 baseline data and the illustrative assumption that site neutrality of drug administration services at off-campus HOPDs had been in place and fully phased in.

  3. 3

    In Medicare Part B, a 20% coinsurance is required after a nominal deductible is met ($233 in 2022). While many beneficiaries have a Medicare Supplement plan which directly pays the Part B coinsurance, pricing in the Medicare Supplement market is extremely competitive, and we implicitly assume savings would be passed to beneficiaries in terms of lower Medicare Supplement premiums.

  4. 4

    Annual impacts are based on 2022 baseline data (see note 3). Rural status corresponds to where the hospital is based, using the rural/urban indicator corresponding to the provider number of the facility in the CMS Provider of Services file. Denominator includes FFS outpatient facility spending only, consistent with the definition in Table 1 of ARC's January 3, 2024 brief. Corresponding physician payments paid under the PFS are not included. Excludes claim lines for drugs.