Becker's Hospital Review

22 RCM LEADER CEOs size up site-neutral pay amid tightening financial picture By Kelly Gooch H ealth system CEOs are navigating a growing list of financial pressures, including Medicaid coverage and reimbursement changes under HR 1 and ongoing payment and policy challenges surrounding the federal 340B drug discount program. Site- neutral payment adds another consideration as health systems weigh where to invest and deliver care. At Winchester, Va.-based Valley Health, concerns about site-neutral payment are already influencing where the system adds outpatient capacity. President and CEO Mark Nantz said Valley Health is keeping new outpatient sites on its hospital campuses in part to preserve hospital outpatient department rates. Peter L. Slavin, MD, president and CEO of Los Angeles-based Cedars-Sinai, said eliminating the outpatient payment differential entirely could cost Cedars-Sinai Medical Center about $200 million annually. J. Stephen Jones, MD, president and CEO of Fairfax, Va.-based Inova, said the policy has not changed where the system invests, but it has prompted greater focus on site of care when evaluating projects. "It disrupts the financial model that includes things like 340B, hospital outpatient department rates and Medicare disproportionate share," Mr. Nantz told Becker's. "All of those things together help us cobble together a pretty fragile financial model. And so if any part of that financial model, somebody starts pulling the string on it, it unravels pretty fast." CMS' proposed 2027 outpatient rule, released July 2, would extend site-neutral payment, which pays the same rate for the same service across care settings, to imaging without contrast, including most X-rays and MRIs, furnished in excepted off-campus provider-based departments. CMS estimates the change would reduce Medicare Part B spending by about $260 million in the first year, with rural sole community hospitals exempt. e proposal follows the 2026 rule, which extended site-neutral payment to drug administration. Comments are due Aug. 31. Dr. Slavin said 340B is at or near the top of the financial headwinds he is tracking. But he also sees substantial risk from site-neutral payment. If the payment differential were eliminated entirely, he said, Cedars-Sinai Medical Center could lose about $200 million annually. He estimated the medical center has already absorbed about $12 million in cuts over the last five to 10 years. "I don't think it could come at a worse time for hospitals," Dr. Slavin said. "Everyone is bracing for the impact of HR 1 and the financial headwinds that that will inevitably create, is already creating and will create even more of aer the midterms, and then the shakiness around 340B as well. So you just add this to the list, and it could have a very significant impact on hospitals." The payer policy problem draining hospital revenue: 6 things to know By Alan Condon P ayer policy changes that are not reflected in contracts are the leading source of revenue leakage for providers, according to a July 29 report from Trek Health in partnership with the Healthcare Financial Management Association. The report is based on a survey of 161 healthcare leaders at hospitals, health systems and other provider organizations. It examined how providers use Transparency in Coverage data in commercial payer negotiations and reimbursement strategy. Six findings: 1. Sixty-eight percent of respondents identified payer policy changes not reflected in contracts as a revenue leakage risk. Inconsistent payment practices across payers followed at 64%, while 42% cited changes to payment methodologies or logic. 2. These findings point to contract management and compliance problems rather than contracted-rate problems, according to the report. Below-market rates were cited by 30% of respondents and limited visibility into competitors' rates by 25%. 3. Only 26% of organizations proactively track and model policy changes across major payers before the changes affect reimbursement. Thirty-two percent model the effects for selected payers or service lines, 19% identify risks reactively but struggle to quantify the financial exposure and 14% typically identify the impact after revenue has already been affected. 4. More than 60% of respondents said forecasting reimbursement shifts driven by payer rate, policy or methodology changes is often or always challenging. 5. Providers also face obstacles in converting available price data into negotiating leverage. Forty-four percent cited limited time or analytical resources as a barrier, while 39% said the data is difficult to normalize or trust. Only 8% reported no significant limitations. 6. Providers can reduce leakage by connecting reimbursement data with payer contracts, financial performance and continuous policy monitoring. Providers with integrated processes are better positioned to quantify risks before they reach the claims process, according to the report. n

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