Fact Sheet: Site-Neutral Policies are Harmful for Patients & Providers

Special interest groups are lobbying Congress to pass proposed so-called “site-neutral” policies which would put patients’ access to essential medical care at risk. By cutting reimbursements to hospitals and health systems already facing financial strain, these policies would jeopardize access to crucial services that only hospitals provide, including for patients in rural and underserved areas.

WHAT IS “SITE-NEUTRAL”?

“Site-neutral” is another name for Medicare cuts or rate-setting by insurance companies. These cuts fail to account for key differencesⁱ between Hospital Outpatient Departments (HOPDs) and other sites of care.

• Hospitals treat sicker, lower-income patients with more complex and chronic conditions than those treated in independent physician offices or ambulatory surgery centers.ⁱⁱ
• Hospitals and their staff are better equipped to handle complications and emergencies, which often require the use of additional resources that other care settings do not typically provide, such as access to ICUs and other critical hospital services.ⁱⁱⁱ
• Hospitals are legally required to treat any patient who walks into the emergency room at any hour of the day, regardless of ability to pay. Site-neutral cuts threaten a critical lifeline for patients.

WHY ARE THESE POLICIES SO HARMFUL?

Mounting financial pressure due to Medicare and Medicaid underpayments from the government and lack of prompt payments from insurance companies threatens patient access to local hospital care in communities across America.

These cuts threaten access to essential health services and would fall disproportionately on rural America and underserved communities where many hospitals are already at risk of closing.

• Over 30% of rural hospitals across America are at risk of closing.^iv Many of these are the only hospitals in their area and provide care to underserved communities.
• More than 149 rural hospitals^v have closed or converted to another type of provider since 2010. Hundreds more are financially insolvent and could shut down at any time.^vi
• Cutting reimbursement to vulnerable care providers risks creating hospital deserts, depriving rural residents of much-needed access to care.^vii
• National uncompensated care costs have increased nearly every year since 2000^viii as hospitals have shouldered more and more of that burden. Many are at their breaking point and risk closure.^ix

Reimbursement cuts will also negatively impact crucial hospital service lines that are already at risk, such as obstetric and emergency care. In rural areas without adequate access, losing these services is especially devastating.

• More than 35% of counties in the United States are considered maternity care deserts, and in some states nearly 80% of counties lack sufficient access. As more hospitals are forced to close their labor and delivery units, expectant mothers will have to travel further and further to receive essential care.^x
• This loss of access has dire consequences for the patients who depend on these services: both maternal^xi and infant mortality rates^xii in rural areas are consistently higher than in urban ones.

Congress should focus on long-term healthcare solutions instead of cuts that would harm rural and underserved patients.

^{i. American Hospital Association. (September 2023). Medicare Site-neutral Legislative Proposals Under Consideration Would Jeopardize Access to Care for Patients and Communities. American Hospital Association.
ii. Lane, K., Julia S., Ori N., & Mehmet S. (March 2023). Comparison of Medicare Beneficiary Characteristics Between Hospital Outpatient Departments and Other Ambulatory Care Settings. American Hospital Association.
iii. American Hospital Association. (June 2023). AHA Statement to the Senate Finance Committee on Consolidation in Healthcare. American Hospital Association
iv. Center for Healthcare Quality and Payment Reform. (2023). RURAL HOSPITALS AT RISK OF CLOSING. Center for Healthcare Quality and Payment Reform.
v. Cecil G. Sheps Center for Health Services Research. (2023). 193 Rural Hospital Closures and Conversions since January 2005. University of North Carolina Chapel Hill.
vi. Marcus R. (January 2023). 631 hospitals at risk of closure, state by state. Becker’s Hospital Review. l
vii. Amanda N., Jeroen M., Sara K., & Tori M. (September 2021). Mapping Healthcare Deserts. GoodRx. f
viii. American Hospital Association. (February 2022). Fact Sheet: Uncompensated Hospital Care Cost. American Hospital Association.
ix. Center for Healthcare Quality and Payment Reform. (2023). RURAL HOSPITALS AT RISK OF CLOSING. Center for Healthcare Quality and Payment Reform. f
x. Deloitte. (2023). March of Dimes maternity care deserts dashboard. Deloitte.
xi. Katharine H., Natalie C., Kasen C., William G., & Sadiya K. (January 2023). Rural–Urban Disparities in Adverse Maternal Outcomes in the United States, 2016–2019. American Journal of Public Health.
xii. Scott L., Jeannette R., Jochen P., & Ciaran P. (March 2021). Access to Risk-Appropriate Hospital Care and Disparities in Neonatal Outcomes in Racial/Ethnic Groups and Rural-Urban Populations. National Library of Medicine.}