New Analysis: Hospital Outpatient Department Cuts Would Compromise Services

New research from the Coalition to Strengthen America's Healthcare highlights how proposed "site-neutral" payment policy will harm hospitals. The Medicare Payment Advisory Commission's proposal would cut hospital payments by $182 billion over 10 years, equivalent to an 8% cut in Medicare payments for the average individual hospital. The coalition analysis details how these payment cuts will compromise other hospital services, including emergency services, maternity care, and behavioral health.

The payment policy proposes to cut hospital payments for select services provided in hospital outpatient departments. Using 2023 Centers for Medicare & Medicaid Services Medicare Carrier data and Medicare Outpatient claims data, the research estimates that all U.S. hospitals would lose nearly $12 billion in revenue during the first year of implementation.

This funding cut will disproportionately affect essential hospitals. On average, essential hospitals have 20% more emergency department (ED) visits than other U.S. acute-care hospitals. Additionally, essential hospitals operate a median of 37 outpatient clinic locations, and two-thirds of essential hospitals have clinics located in rural areas.

The analysis does not consider the impact of hospital payment cuts from the Working Families Tax Cut legislation, also known as H.R. 1, which will further increase hospital financial distress.