Site-Neutral Payments to Save Medicare $150B
Medicare's push for site-neutral payments, which pay the same rate for a service regardless of setting, could save the government an estimated $150 billion over 10 years. The 2026 Outpatient Prospective Payment System (OPPS) rule represents the strongest move toward this policy yet, aiming to close the gap where hospitals are paid roughly double for the same procedures performed in non-hospital settings. This financial pressure is expected to accelerate the shift of imaging procedures to outpatient and freestanding centers.
- The 2026 rule applies the site-neutral payment policy to drug administration services in "grandfathered" off-campus hospital outpatient departments, reducing their payment rate to 40% of the standard hospital outpatient rate. This change is projected to decrease total Medicare payments by $290 million in 2026, with an exemption for rural Sole Community Hospitals. - This policy addresses significant price disparities; for privately insured patients in 2022, a Level 1 imaging service without contrast cost an average of $227 in a hospital outpatient department versus just $61 in a physician's office. - The payment changes are accelerating a market shift that has already seen approximately 40% of all radiology volume move to outpatient imaging centers and clinics. In response, health systems are expanding their freestanding imaging footprint through acquisitions, joint ventures, and building new facilities. - This site-of-care shift varies significantly by region; Florida, along with Arizona and Colorado, shows a much higher penetration of freestanding imaging centers compared to more hospital-centric states like Wisconsin. - Previous legislation, the Bipartisan Budget Act of 2015, had a limited impact because it exempted existing ("grandfathered") off-campus departments, affecting less than 1% of total outpatient spending. The 2026 rule begins to close that loophole. - Growth in imaging is being led by advanced modalities, with one forecast projecting the utilization of CT and MRI to grow from 21% of all U.S. diagnostic procedures in 2021 to 23% in 2026. Another decade-long projection estimates 23% growth for PET, 16% for ultrasound, and 15% for CT exams. - The overall U.S. diagnostic imaging services market is projected to grow from $149.5 billion in 2025 to nearly $240 billion by 2032. Outpatient settings are often the first to adopt new technologies like AI to improve efficiency as reimbursement values decline. - For Calendar Year 2026, the Centers for Medicare & Medicaid Services (CMS) finalized an overall net increase of 2.6% for the Outpatient Prospective Payment System (OPPS) rates compared to 2025.
