The Department of Health and Human Services proposed the change in early July, according to an opinion article published by Newsweek. The measure would cover certain imaging services without contrast, including X-rays, MRIs and ultrasounds, and is projected in the article to save beneficiaries and taxpayers $260 million in 2027 and $7.2 billion over 10 years.
Hospital Ownership Can Substantially Increase Medicare Payments
Under existing Medicare rules, services delivered at hospital-owned clinics can generate both a physician payment and a separate facility fee for the hospital. Newsweek reports that this structure can result in Medicare paying hospital-owned facilities between 43% and 670% more than independent practices for the same services.
The difference also affects what patients pay directly because Medicare beneficiaries generally face 20% coinsurance for outpatient care. According to the article, an epidural injection in 2023 carried $148.17 in coinsurance at a hospital-owned clinic, compared with $51.17 when the same procedure was performed at a freestanding physician office.
The payment gap is also linked in the article to changes in physician practice ownership. Hospital systems have a financial incentive to acquire independent practices, convert them into hospital outpatient departments and bill services at higher hospital rates. From 2012 through 2024, the share of physicians working in hospital-owned practices increased from 23.4% to 34.5%.
Those payment differences come as Medicare Part B costs are also rising. The source states that 7.4 million Medicare beneficiaries spent more than one-tenth of their per capita income on Part B premiums in 2024. Medicare trustees project annual Part B premiums will rise from $2,434 in 2026 to $4,327 in 2035, an increase of 77.7%.
Federal Officials Are Expanding Site-Neutral Payment Policies
Congress provided federal officials with authority to address increases in hospital outpatient spending when it created Medicare’s outpatient payment system in 1997. The law directed the HHS secretary to develop a method for controlling unnecessary increases in the volume of outpatient hospital services.
During President Donald Trump’s first term, HHS began equalizing Medicare payments for clinic visits at off-campus hospital facilities in 2018. The policy was later extended to drug administration services. According to Newsweek, combining those measures with the proposed imaging rule would save beneficiaries and taxpayers an estimated $1.3 billion each year once the imaging policy is finalized.
The authors also call for site-neutral payments to be applied to nuclear cardiology imaging used to diagnose coronary artery disease and heart failure. Medicare currently pays hospital-owned facilities an average of 313.2 % more than independent offices for those services, the article states, with some beneficiaries paying as much as $220.98 more for a single scan.
A broader proposal would extend site-neutral payments across on-campus and off-campus hospital outpatient departments. The Congressional Budget Office estimates such a policy would save taxpayers $156.9 billion over 10 years. The Committee for a Responsible Federal Budget estimates beneficiaries would see $137 billion in lower Part B premiums, cost-sharing and Medigap expenses.
