The Medicare Hospital CY 2027 OPPS proposed rule includes key policy changes that radiologists need to know about.
FROM THE CHAIR OF THE COMMISSION ON ECONOMICS
The Medicare Hospital Outpatient Prospective Payment System (OPPS) proposed rule for calendar year (CY) 2027 includes a significant policy change for outpatient imaging: an expansion of site-neutral payment for certain noncontrast imaging services furnished in excepted off-campus provider-based departments (PBDs). This proposal reflects a broader Medicare effort to align payment with the resources required to deliver services rather than the ownership structure of the facility where care is provided. For radiologists, this proposal represents an important development because outpatient imaging has increasingly become a focus of Medicare payment reform. Understanding the rationale, scope and potential implications of site-neutral payment will be critical as practices navigate an evolving healthcare environment.
Historically, Medicare has paid differently for the same service depending on where it is performed. Imaging services furnished in a hospital outpatient department are generally paid under OPPS while the same services performed in a freestanding imaging center or physician office are typically paid under the Medicare Physician Fee Schedule (PFS). Before 2015, a hospital could acquire a physician office or imaging center, convert it to a PBD, and bill under the OPPS for a significantly higher facility payment. Congress acknowledged that this created a financial incentive for hospital acquisition of outpatient services, and policymakers questioned whether these payment differences accurately reflect differences in the resources required to provide the service. Site-neutral payment policies attempt to reduce these differences by paying similar amounts for comparable services regardless of the site of care.
The Bipartisan Budget Act of 2015 set the stage for site-neutral payments by stating that new off-campus PBDs established after Nov. 2, 2015, would no longer receive standard OPPS payment. Instead, they generally receive lower rates (eventually through PFS-based payment mechanisms). The exception was “excepted” off-campus PBDs — those that were already billing as hospital outpatient departments before the cutoff date. In the CY 2027 OPPS rule, CMS has proposed expanding site-neutral payment to certain imaging services without contrast. The proposal targets excepted off-campus PBDs, hospital outpatient departments that were grandfathered under Section 603 of the Bipartisan Budget Act of 2015 and have continued to receive OPPS payment rates despite being located away from the hospital campus.
The proposal includes several categories of outpatient imaging, including:
Under the proposal, these services would be reimbursed at rates aligned more closely with Medicare PFS payments rather than traditional OPPS rates.
Supporters of site-neutral policies argue that payment should follow the service rather than the site of ownership.
Services involving contrast administration and other more complex imaging categories are not included in this initial proposal, although it seems likely CMS will consider expanding the site-neutral payments across radiology as well as surgery and other services commonly performed in hospital outpatient settings.
CMS and other policymakers have argued that site-neutral payment can reduce Medicare spending, decrease beneficiary cost-sharing and reduce incentives for consolidation of outpatient services into higher-cost hospital settings. The underlying policy question is straightforward: If the same clinical service is provided with similar resources, should Medicare pay substantially different amounts based solely on whether the facility is hospital-owned? Supporters of site-neutral policies argue that payment should follow the service rather than the site of ownership.
Hospitals and health systems, however, have emphasized that hospital outpatient departments operate within a broader healthcare infrastructure. They maintain emergency services, provide care for medically complex patients, meet additional regulatory requirements and support access in communities where freestanding facilities may not be available. These factors may contribute to differences in the cost of delivering care.
The implications for radiology practices are multifaceted. Many outpatient imaging services are performed across a variety of settings, including hospital outpatient departments, independent imaging centers and physician offices. Changes in payment differentials may influence decisions regarding imaging site development, hospital acquisitions and operational strategies. Radiologist-owned imaging centers that are already facing year-over-year Medicare PFS cuts, skyrocketing labor costs and continued work force challenges are now presented with another assault to their bottom line. Academic radiologists and private practice radiologists with professional-component-only business models may be impacted, and stipends or department support could be jeopardized if the hospital’s technical revenue from outpatient imaging takes a hit.
Radiology must continue to demonstrate the value created by timely, accurate and actionable imaging. Payment reform should encourage efficiency and appropriate utilization while preserving access to diagnostic services and supporting diagnostic excellence. ACR’s comment letter to the OPPS proposed rule will encourage CMS to consider methods of reducing inappropriate imaging rather than carte blanche reduction in reimbursement.
The CY 2027 OPPS proposal highlights the importance of continued engagement by radiologists in discussions about healthcare payment reform. Site-neutral payment is part of a larger conversation about affordability, consolidation, access and the future organization of outpatient care. As these policies evolve, radiologists should focus on ensuring that payment systems reflect the true value of diagnostic imaging and the expertise required to provide it. The goal should be a payment framework that promotes high-quality, efficient care while supporting innovation and access for patients.
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