Site-neutral payment: Why patients make up for inadequate pay

If there are problems with the way Medicare reimburses hospitals for patient care, the nation should face those head-on instead of using piecemeal policies that create unequal playing fields across the health care economy. 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, offers this explanation. He’s the co-author of a Health Affairs analysis of 2026 Medicare physician payment.

Medical Economics: To be sure, hospital leaders argue, and for many things rightly so, that hospitals and health systems have different liabilities, different responsibilities and needs compared with physician offices. Do they have a case for getting greater pay for some of those treatments and procedures?

Christopher M. Whaley, Ph.D.: I think that's a nuanced question. So, in many areas, hospitals are correct that they are not adequately paid. And so the argument is that we're underpaid for services like staffing or emergency departments, and therefore we need to get additional payments on surgical services from our hospital outpatient department versus an ASC to offset underpayments on, say, the emergency department. There may be some truth into that. I think the problem is that we're then into a landscape where we're playing policy Whac-a-Mole, rather than just addressing problems head on. We're essentially asking patients who are getting a colonoscopy to pay more because of site-of-care payment differentials if they get their colonoscopy and say, hospital outpatient department versus an ASC to subsidize the fact that Medicare may not be paying emergency departments adequately. And so I think it makes much more sense to, if there are areas where the Medicare system or others are underpaying, to pay adequately for those services and not to rely on kind of this complicated payment model where we're going to pay some services more when they can be done cheaper in other settings, and making patients pay those price differences.