Key Issues > Duplication & Cost Savings > GAO's Action Tracker > Medicare Payments by Place of Service (2016-30)
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Health: Medicare Payments by Place of Service (2016-30)

Medicare could save billions of dollars if Congress were to equalize the rates Medicare pays for certain health care services, which often vary depending on where the service is performed.


Congress should consider directing the Secretary of Health and Human Services to equalize payment rates between settings for evaluation and management office visits and other services that the Secretary deems appropriate and return the associated savings to the Medicare program.


As of March 2020, no additional legislative action has been identified that would address GAO’s December 2015 suggestion. While Congress enacted legislation in November 2015 to exclude services furnished by off-campus hospital outpatient departments from higher payment effective January 1, 2017, this exclusion, as amended, does not apply to services furnished by providers that were under construction or billing as hospital outpatient departments prior to November 2015. All providers billing as hospital outpatients during GAO's study (issued in December 2015) continue to be paid under the higher rate. In addition, this exclusion does not apply to services provided by on-campus hospital outpatient departments.

However, the Centers for Medicare & Medicaid Services (CMS) has taken some action. In November 2018, CMS issued a final rule adopting payment changes—that have since been partially overturned under a decision by a federal district court, which CMS has appealed—capping payment rates for certain services furnished by the off-campus hospital outpatient departments that existed or were under construction in 2015 at the physician fee schedule rate. Since these services furnished by these off-campus hospital outpatient departments were paid under a higher rate, the payment cap, which was to be implemented over 2 years, was intended to equalize payment rates for certain clinical visits between settings. In 2019, CMS applied 50 percent of the payment reduction and in 2020 and subsequent years planned to apply 100 percent of the payment reduction. The rule applied to specific clinical visits; and other services would continue to be paid at the higher rate. However, a federal district court overturned the payment cap in September 2019. CMS has appealed that ruling and adopted a final rule in November 2019 that will implement the payment reduction in 2020. A lawsuit challenging the November 2019 final rule has been filed.

GAO plans to continue to monitor congressional action and any additional agency actions, including actions to equalize payment rates that Medicare pays for evaluation and management services in all hospital outpatient departments regardless of whether they are deemed on-campus or off-campus. Until such action is taken to equalize payment rates Medicare pays for certain health care services, as GAO suggested in December 2015, Medicare and beneficiaries could continue to pay more for the same health care service depending on where the service is performed.

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