Site-neutral payment: Making progress in 2026?

One of the most positive payment developments for 2026 is Medicare’s initial move toward site-neutral payments, beginning with drug administration, which could be a meaningful step toward reducing long-standing disparities between hospital and nonhospital reimbursement. Paying roughly double for the same services in hospital settings has driven higher spending and consolidation, and while the new policy is limited in scope, it signals progress toward broader payment reform. Here is a summary by Christopher M. Whaley, Ph.D., is associate professor, health services, policy and practice, and associate director of the Center for Advancing Health Policy through Research at Brown University. He’s the co-author of a Health Affairs analysis of 2026 Medicare physician payment.

Medical Economics: The title of your article that came out in late 2025 is “A Promising Step Toward Site Neutrality: What the 2026 OPPS and ASC Rule Gets Right — And What's Still Missing.” In your own words, what's one of the things that's going right for payment in 2026?

Christopher M. Whaley, Ph.D.: That's a great question. And so just to take a step back, I think one of the curious things of the health care system is that many payers, driven by Medicare but also spilling over to many commercial insurers, pay for the exact same service whether it's done in a hospital or a nonhospital setting, quite a bit differently. And so if you look at the Medicare system, a standard procedure, whether it's a imaging test like an MRI or lab test, or even a surgical procedure like a colonoscopy are paid roughly double if they're done in a hospital versus nonhospital setting. This has been, I think, a pretty strong driver of both increased spending in the Medicare program, as well as among commercial insurers, and it's also been a strong driver of why the health care system in the United States is so consolidated. So if you're a hospital or health care system, you can go out and acquire a physician practice and say, now that you're now my employee, send all your referrals back to me as a hospital system where we can bill Medicare double the rate. And so that's a key reason why over half of U.S. physicians work for a hospital or health care system. And so this has been, I think, a pretty key driver of the Medicare system for many years, and Medicare has, through a variety of channels, whether it's Medicare Payment Advisory Commission or internal CMS reports, has thought about reforming this payment and saying, if a service can be done safely in a variety of settings, we're just going to pay a single rate for that setting and kind of let the delivery system, if you will, shake itself out. And so what Medicare recently announced is small steps towards this site neutrality payment difference, and starting with payment for for drug administration, to have a single payment rate regardless of setting. So I think that's certainly a step in the right direction. It's a fraction of the services that are done in multiple settings. And so while it's a certainly a step towards the right direction and a small set of procedures that are being paid site-neutral, there are many other services where Medicare could also pay site-neutral.