Medicare uses more than a dozen different payment systems to set payment rates for the medical items and services the program covers for beneficiaries. The location where a beneficiary receives a service determines which payment system applies. Each system has its own methodology for rate-setting reflecting costs of operating the setting and the different patient populations served in each.
However, these methodologies rarely account for the amount Medicare might pay for the same service provided in a different clinical setting. As a result, services that can be provided in a variety of clinical settings may sometimes be paid for at dramatically different payment rates.
Recently, the Centers for Medicare and Medicaid Services (CMS) and the Medicare Payment Advisory Commission (MedPAC) have been exploring options to eliminate this differential payment for certain services. This brief explains the origins of these differential payments and the debate over approaches that have been proposed for developing so-called site-neutral payments.
Some states have passed legislation to expand access to experimental treatments for patients with serious or life-threatening conditions.
The Affordable Care Act mandates medical product manufacturers to disclose payments or other incentives made to physicians and teaching hospitals. Called the Physician Payments Sunshine Act, the database will be publicly searchable.
Researchers continue to study why Medicare spending per beneficiary varies significantly from one part of the country to another.