HR-3023-119
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Sponsored by Victoria Spartz (R-IN)
What it does
This bill would repeal certain exceptions that currently allow off-campus outpatient departments of hospitals to receive higher Medicare payment rates than independent clinics providing the same services. It would also require hospitals to use separate, unique billing identifiers when submitting insurance claims for services delivered at off-campus outpatient locations, making those services more easily distinguishable from services provided on a hospital's main campus.
Who benefits
Medicare beneficiaries who may face lower cost-sharing (copays and coinsurance) when site-neutral payment rates apply, since patient cost-sharing is typically tied to the payment rate. The Medicare program and federal taxpayers, who would likely see reduced Medicare spending. Independent physician practices and freestanding clinics that currently compete at a payment disadvantage against hospital-affiliated off-campus sites. Private insurers and employers who use Medicare rates as a benchmark for their own payment negotiations.
Who is hurt
Hospitals and health systems that currently receive higher Medicare payments for services delivered at off-campus outpatient departments — particularly large systems that have expanded by acquiring physician practices and converting them to hospital outpatient departments. Hospital workers at off-campus sites whose positions could be affected if facilities reduce services or close in response to lower reimbursement. Patients in rural or underserved areas where a hospital-affiliated off-campus clinic may be the only accessible provider, and where reduced payments could threaten that clinic's viability. Physicians employed by hospital systems who may face compensation or staffing changes.
Supporters argue
Supporters argue that Medicare currently pays hospitals significantly more than independent clinics for identical services — sometimes two to three times as much — simply because a clinic is affiliated with a hospital, not because the care is different or more complex. They contend this payment disparity drives hospital consolidation of physician practices, raises costs for Medicare and patients without improving outcomes, and disadvantages independent providers. The unique identifier requirement, they argue, would improve billing transparency and help detect overbilling by making off-campus services clearly traceable in claims data.
Opponents argue
Opponents argue that hospitals bear higher overhead costs — including 24/7 emergency readiness, compliance burdens, and care for uninsured patients — that justify higher payment rates even at off-campus locations, and that site-neutral cuts ignore these structural differences. They contend that reducing reimbursement could force hospitals to close or scale back off-campus clinics, particularly in rural and low-income communities where those sites serve as critical access points. The additional identifier requirement, they argue, imposes new administrative burdens on providers already facing complex billing systems, potentially increasing compliance costs without proportionate benefit.
Constitutional context
Congress has broad authority to set Medicare payment rates under the Taxing and Spending Clause (Art. I, §8, cl. 1), and modifications to existing Medicare payment rules fall squarely within that authority. No significant constitutional challenge is anticipated, as this bill adjusts payment rates within an existing federal program rather than compelling private action or imposing conditions on states.
Checks and balances
Congress would reduce Medicare payment rates for off-campus hospital outpatient departments; the Centers for Medicare & Medicaid Services (CMS) within the executive branch would implement the changes through rulemaking, subject to post-Loper Bright independent judicial review if challenged.
Historical precedent
The Bipartisan Budget Act of 2015 first established site-neutral payment policies for newly established off-campus outpatient departments, and CMS has since issued rules expanding site-neutral payment, though courts and Congress have repeatedly revisited the scope of those exceptions.