Support site neutral payment reform to lower costs and protect patients

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Imagine this: you’re shopping for a smartphone at your local, independently owned technology store, and it costs $600. But instead of going with this option, you’re forced to drive multiple towns over and pay $1,800–for the exact same smartphone.

It sounds nonsensical. But sadly, it’s akin to what’s taking place in today’s healthcare system, where hospitals charge significantly higher rates than smaller, independent physician practices–even when the services being provided are essentially identical.

Take my field of cancer care, for example. Currently, Medicare pays significantly more to a hospital for providing the same procedures that we can offer in the independent oncology practice setting. According to the American Cancer Society, services provided in hospital outpatient departments (HOPDs) are reimbursed at a rate three times higher than those provided in a physician’s office, with certain services being reimbursed up to five or six times higher. This translates to higher costs for patients, who typically pay 20% of a procedure’s cost.

In addition to driving up costs for vulnerable patients and American taxpayers, site-based payment policies are distorting the marketplace by incentivizing larger hospitals and health systems to acquire independent physician practices at an alarming rate. Following a buyout, hospitals can reclassify these facilities and charge inflated rates without offering any new benefits for patients. Today, more than 52.1% of doctors work for a hospital, a trend that is accelerating. In 2022 and 2023 alone, the percentage of hospital-owned practices rose 7.3%.

This rate of consolidation leads to fewer independent practices, higher healthcare costs, and reduced access for patients. All of this threatens access to community-based cancer care, often forcing cancer patients into settings where they receive less personalized care at a higher cost. For rural patients especially, that could mean more burdensome commutes and longer wait times.

There is simply no good reason to support this kind of payment disparity.

As lawmakers look for ways to reduce healthcare spending and maximize efficiency, site neutral payment reform has emerged as a promising option. Enacting it will not only create a level playing field and ensure patient access to community care, it will help save taxpayer dollars too. According to the March 2025 Medicare Payment Advisory Commission (MedPAC) report, healthcare consolidation measurably increases total Medicare spending, but site neutral payments across all medical services could help reduce Medicare spending.

The Trump administration has called for policy reforms that save money without lowering healthcare quality. The President recently signed an executive order that, among other issues, seeks to ensure Medicare payments for services like drug administration do not drive patients toward more expensive, hospital-based care when more affordable and equally effective alternatives are available. According to the White House, “standardizing Medicare payments for prescription drugs, such as cancer treatments, regardless of where the patient receives care,” can help lower drug prices by up to 60%.

Thankfully, the Centers for Medicare & Medicaid Services (CMS) recently proposed an identical payment rate for drug administration services in off-campus HOPDs and physician offices. If finalized, these changes would generate $210 million in savings to the Medicare program and save Medicare beneficiaries $70 million in reduced co-pays. For Medicare beneficiaries living on a fixed income, these savings will mean not having to choose between paying for cancer treatments or paying for other daily essentials, like groceries, housing, and utility bills.

CMS also proposed a small increase for physician reimbursement rates in its CY 2026 Medicare Physician Fee Schedule (MPFS). By inching physician payments closer to those of hospitals, CMS is finally indicating a long-overdue shift towards site neutral payments, which will ensure that payments to community oncologists reflect the value they deliver in their communities.

These changes are a step in the right direction, which is why community oncologists nationwide encourage CMS to finalize these proposals. At the same time, Congress should follow CMS’s lead on this issue and consider broader site neutral payment reform for services beyond drug administration. According to the Congressional Budget Office, this would save the federal government nearly $157 billion over ten years.

With the federal government working hard to eliminate wasteful spending, passing enduring site neutral payment reform is the next logical step for Congress to take. It’s a smart policy that would help stabilize Medicare, reduce costs for patients and taxpayers, ensure fair competition in the healthcare marketplace, and protect the vital role of local oncology practices in communities nationwide.

Lawmakers on both sides of the aisle should push for continued passage of such reforms and help make cancer care—and healthcare in general—more affordable and accessible for all.

Debra Patt, MD, PhD, MBA, is a breast cancer specialist at Texas Oncology and the medical director of The US Oncology Network.