Site-neutral payment: The situation for rural hospitals

Changing payment policies to be site-neutral may not have a dire effect on rural hospitals. Christopher M. Whaley, Ph.D., associate professor, health services, policy and practice, and associate director of the Center for Advancing Health Policy through Research at Brown University, explains. He’s the co-author of a Health Affairs analysis of 2026 Medicare physician payment.

Medical Economics: Rural hospitals especially support their communities in a financial, social, medical way that few other organizations do. How would you generate a payment formula that is fair and equitable to both independent physicians and rural hospitals?

Christopher M. Whaley, Ph.D.: So, a lot of the site-of-care payment differentials are less impactful to rural hospitals just because they tend not to have both inpatient settings as well as a say attached ASC or HOPD. So they tend to be just within the same same facility, and so I in general, think that site-neutral payments would have much less impact on rural or critical access hospitals than it would for other standard hospitals or general acute care hospitals. But then it gets back to the previous point that if we think that rural hospitals are underpaid or are facing financial distress, then we should pay those hospitals directly, rather than again, having a complicated policy, Whac-a-Mole system.