Site-Neutral Payments

Medicare uses different payment systems depending on where care is delivered. Recent proposals seek to eliminate this differential.

Medical Bill

The origins of Medicare's different payment systems and proposals for developing so-called site-neutral payments are explored in this brief.

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.


Policy Briefs


Medicare's New Physician Payment System

April 21, 2016

This health policy brief explains the Medicare Access and CHIP Reauthorization Act which creates a payment system for physi­cians that will accelerate Medicare’s transi­tion from fee-for-service to payment based.


Nonprofit Hospitals' Community Benefit Requirements

February 25, 2016

The effects of the provisions in the ACA on the health care system will need to be evaluated over time to determine how they affect hospitals’ responsibilities and obligations to their communities.


Bundled Payments for Care Improvement Initiative

November 23, 2015

Explore four different models being tested that have the potential to reduce Medicare spending, and Cen­ters for Medicare and Medicaid Services' experience with the project to date.

Media Contacts

Sue Ducat

Health Affairs (301) 841-9962

Additional Media Contact: Melissa Blair

Robert Wood Johnson Foundation (609) 627-5937

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Payment Reform