Patients win big on two health care priorities set to rein in high costs

In a time of rising health care costs, we applaud the Trump Administration’s recent action that aims to lower health care costs for all Americans. For far too long, Americans have faced inflated and unjustified billing that leave many to delay or forgo care or to fall deep into debt as a result of seeking the care they need. 

Same service, same price policy is expanded

Medicare has eliminated payment differences for all physician administered drugs depending on the location of the treatment. Hospital affiliated facilities were getting much higher payments for providing the same service. In 2021, Medicare’s average reimbursement for drug administration services was two to three times as much in hospital outpatient departments (HOPDs) compared to freestanding or independent physician offices. Going forward, Medicare will pay the same price regardless of where the patient is treated. This policy, known as site neutral payments, will have a dramatic cost-saving effect. Now, all payments will be at the lower rate, with no impact to the quality of care provided.

In 2015, Medicare began using this cost-cutting policy for physician-administered drugs in very limited sites of service. It only applied to new off-campus HOPDs. This new broad expansion of site neutral payments for all physician-administered drug treatments is projected to save Medicare $210 million and Medicare beneficiaries an additional $70 million in out of pocket costs in 2026 alone. 

The policy takes a step towards a recommendation made by MedPAC, the independent and nonpartisan group that advises on Medicare reimbursement rates. MedPAC suggested that care should be paid at the rate used for the lowest-intensity setting in which it is safe and appropriate to be given. This ensures patients receive quality care without incentivizing hospital systems to schedule simple procedures in unnecessarily costly environments.

Same service, same price policy saves money for patients as well as Medicare. In traditional Medicare, patients usually pay 20% of the cost of outpatient care as a coinsurance – so lower prices for Medicare directly lower out-of-pocket costs for patients. This policy also has a potential impact on the costs for those in the commercial insurance market: many health plans negotiate rates based on what Medicare pays, meaning the new rule has the potential to lower prices throughout our health care system.

The new rule brings us closer to sensible payments that properly encourage the use of the lowest-intensity sites of service for treatments – saving both Medicare and its beneficiaries money. This site neutral policy could be extended to even more treatments and health care services as recommended by MedPAC’s report and we hope Congress and the Administration will continue to expand the scope of these cost-cutting measures.

Clear prices backed by clearer enforcement 

Since 2021, under an executive order from President Trump, hospitals have been required to post prices of items and services on hospital websites. Unfortunately, compliance with federal rules has been mixed at best, as demonstrated by PIRG’s 2024 reports Post the Price and Acute Confusion.

The finalized rule improves upon the executive order by requiring hospitals to post actual dollar-and-cents prices that insurers paid in the past instead of estimates or formulas. The hospitals will also be required to “attest” to the accuracy and completeness of the price data as well as include the name of the hospital senior executive who is responsible for ensuring the price transparency is provided online as outlined in the rule. 

What’s next? 

We applaud these finalized changes which will help lower costs and improve price transparency for consumers. Yet, more must be done to ensure Americans are getting the high value health care they deserve. 

We urge Congress to keep up the momentum to lower health care costs for patients by: 

Expanding site neutral payments to all sites of service and types of care that can be safely delivered in lower-cost settings. 

Passing legislation to further strengthen and enforce existing hospital transparency rules, expand them to labs and imaging centers and give businesses real-time access to their claims data to better manage costs.

This story was originally reported by our allies at PIRG.