Medicare proposes $8.1B boost for hospital outpatient care

Axios

16-07-2025

The Trump administration wants to boost Medicare payments for hospital outpatient services by $8.1 billion next year — while simultaneously decreasing hospitals' reimbursement for services like chemotherapy.
Why it matters: The payment proposal reveals that the administration is pushing hard for site-neutral reimbursements, or paying the same rate for services regardless of whether they're delivered in hospital outpatient facilities or doctors' offices. Hospitals typically bill Medicare more for the same services.
Health systems have successfully lobbied against similar proposals in Congress in recent years.
State of play: Hospital outpatient departments overall could expect a 2.4% increase in their Medicare payments, mostly due to an increase in the index that the Centers for Medicare and Medicaid Services uses to measure changes in prices.
But Medicare administrators want to decrease what they pay hospitals to administer outpatient drugs at off-campus facilities, including chemotherapy, to make the sums equal to what is paid to physicians in private practices.
This year, Medicare pays physician offices around $119 for a chemotherapy infusion, while off-site hospital outpatient facilities collected about $341, per the proposal.
What it says: "We believe that financial incentives have driven volume from the office setting to the higher paying [outpatient department] setting, creating unnecessary increases in the volume of OPD services," the proposed rule states.
CMS expects the change to decrease Medicare patients' cost-sharing by $70 million in 2026, and to reduce Medicare spending on hospital outpatient services by $210 million.
The American Hospital Association called the proposal "inadequate."
"We oppose the proposal to expand 'site-neutral' cuts and eliminate the inpatient-only list, as both policies fail to account for the real and crucial differences between hospital outpatient departments and other sites of care," Ashley Thompson, senior vice president of public policy analysis and development, said in a statement.
CMS also wants to phase out over three years the list of services Medicare will only pay for when delivered in an inpatient setting.
Medicare created the list in 2000 on the premise that some procedures could only be safely delivered at an inpatient hospital. The list currently includes 1,731 procedures.
CMS proposed eliminating the list in 2021 but ultimately decided not to. Now, the agency says it's decided that innovations in medicine have made outpatient procedures much safer.
"We agree with past commenters that the physician should use clinical knowledge and judgment, together with consideration of the beneficiary's specific needs, to determine whether a procedure can be performed appropriately in a hospital outpatient setting or whether inpatient care is required for the beneficiary," the proposal says.