Site-neutral payment policies aim to equalize Medicare reimbursement for outpatient services between hospital off-campus departments and physicians’ offices. Site-neutral proposals currently circulating would pay for services provided at off-campus departments at the lower Medicare physician fee schedule rate. These payment policies have far-reaching consequences for rural hospitals, threatening their financial sustainability and the health of the communities that they serve. 

In recent years, conversations around expanding site-neutral payments have increased and caught the attention of lawmakers. However, what is missing from this discussion is the disproportionate impact on rural hospital sustainability due to the unique characteristics of these facilities: 

• Rural hospitals depend heavily on outpatient services, with 75% of their revenues coming from outpatient departments in 2021. Rural hospitals and their off-campus departments meet stringent conditions of participation that result in higher costs per service which are not fully addressed by lower site-neutral payment rates. 
• Rural off-campus outpatient departments often serve as the only source of outpatient care in a rural area. These facilities are critical safety nets, especially as standalone physician practices continue to close. This is especially problematic as Medicare and Medicaid beneficiaries in rural areas disproportionately rely on HOPDs and 72% of these patients present with complications or comorbidities. As a result, many patients may forgo preventive or routine care, leading to higher utilization of emergency departments, increasing costs to the larger health care system.
• Half of rural hospitals operate at a loss, meaning that further payment cuts could push many to reduce essential services or close entirely. This would leave many residents without nearby health care access, forcing them to travel long distances for basic treatments and emergency care.
• Hospitals are often the largest employers in rural areas. Site-neutral payment cuts will hinder rural hospitals’ ability to recruit staff, worsening existing workforce shortages. Financial instability could lead to job losses and economic downturns in already fragile rural economies.

NRHA rejects any future site-neutral payment expansions that will disproportionately harm rural hospitals. 

Please find NRHA’s rural site neutrality fact sheet here.