Site-Neutral Payment Policies and Their Impact on Claims Pricing in 2025–2026

Medicare’s site-neutral payment policies are poised to be one of the most impactful reimbursement shifts for hospitals and ambulatory surgical centers (ASCs) in 2025 and 2026. Designed to equalize payments for the same service, regardless of whether it’s performed in a hospital outpatient department (HOPD) or an ASC, these policies aim to curb spending and improve efficiency.

While the policy’s intent is to promote fairness and reduce Medicare expenditures, its ripple effects on claims pricing, payer negotiations, and provider revenue strategies are significant. For healthcare finance teams, the shift requires a deeper understanding of how CMS’s claims pricer logic will adjust—and how to adapt revenue cycle operations accordingly.

🌍 Background: The Push Toward Site-Neutrality

Historically, Medicare reimbursed hospital outpatient services at a higher rate than those performed in ASCs or physician offices, citing higher overhead costs in hospitals. Critics argued this created an incentive to shift lower-acuity services to higher-cost settings, inflating Medicare spending.

In recent years, CMS has expanded its site-neutral reimbursement policy to more service lines, gradually aligning payment rates for common procedures across settings. The agency’s goal: ensure taxpayers and beneficiaries don’t overpay for the same care simply because of the location.

🔑 Key Policy Changes for 2025–2026

CMS’s final rules for the 2025 and proposed policies for 2026 include:

1. Expansion of Site-Neutral Services List
   

   • More cardiac, orthopedic, and diagnostic imaging codes added to the list.

   • These services will be reimbursed at the lower ASC or physician office rate when performed in off-campus hospital outpatient departments.
     

2. Updated Claims Pricer Logic
   

   • Medicare’s claims pricer will automatically adjust payment based on the site of service (POS) code and HCPCS/CPT combination.

   • Claims grouping edits will flag mismatches between POS codes and service codes for targeted services.
     

3. Gradual Phase-In for Certain Procedures
   

   • High-impact procedures will have a two-year blended rate to help hospitals transition revenue models.
     

4. Increased Scrutiny on Off-Campus Departments
   

   • New reporting requirements for off-campus HOPDs to track utilization and compliance.

📈 Impact on Claims Pricing and Revenue Cycles

1. Shift in Payment Rates A hospital outpatient department billing for a service newly covered under site-neutral rules will now see payments aligned with ASC rates, which can be 20–40% lower than traditional HOPD rates. This directly impacts claims pricing at the line-item level.
   

2. Increased Complexity in CMS Claims Pricer Logic The Medicare claims pricer will now:
   

   • Cross-reference POS codes with an expanded list of site-neutral HCPCS codes.

   • Apply ASC rates even when the service is billed under a hospital provider number.

   • Trigger denial or adjustment codes if mismatches are detected.
     

3. Contract Negotiations with Commercial Payers Commercial payers often follow Medicare’s lead. As site-neutral rules expand, expect commercial payer pricers to update similarly, affecting non-Medicare revenue streams.
   

4. Strategic Case Mix Shifts Providers may re-evaluate whether certain outpatient services should be shifted to ASCs to maintain margins and optimize capacity.
   

⚠️ Operational Challenges for Providers

Coding and Billing Adjustments

• Coders must ensure correct POS codes to avoid underpayments or denials.

• Billing teams must track which HCPCS codes are site-neutral to prevent pricing errors.
  

Claims Grouping and Pricing Audits

• Internal audits should validate CMS pricer outputs for high-volume procedures.

• Revenue integrity teams must ensure grouping edits align with updated policy logic.
  

Patient Communication

• With potential changes in coinsurance amounts for beneficiaries, front-end teams should prepare for patient financial counseling updates.
  

📊 Real-World Example

A mid-sized hospital in the Midwest saw a $1.8 million projected annual revenue drop when CMS added several diagnostic imaging codes to the site-neutral list. By proactively identifying these codes and shifting lower-acuity cases to its affiliated ASC, the hospital reduced the impact to $900,000 and maintained throughput in higher-margin service lines.

✅ Compliance Considerations

The OIG and Medicare Administrative Contractors (MACs) are expected to audit site-neutral compliance. Failure to code the correct POS or misrepresent the site of service could result in overpayment recoupments and penalties. Tip: Revenue cycle leaders should implement automated POS validation at the claim-editing stage to reduce compliance risk.

🔮 Preparing for the Future

Step 1: Audit Your Current Service Mix

• Identify which procedures are on the site-neutral list for 2025.

• Quantify revenue impact by payer and site of service.

  
  

Step 2: Update Your Claims Pricing Models

• Ensure your internal pricer logic mirrors CMS’s updated methodology.

• Integrate ASC rate schedules where applicable.

  
  

Step 3: Train Your Teams

• Coders, billers, and front-desk staff should understand how POS affects payment.

• Incorporate updates into your claims grouping and audit processes.

  
  

Step 4: Monitor Policy Proposals

• CMS often releases proposed rules months in advance—early review allows for proactive strategy shifts.
  

📉 The Bottom Line

CMS’s site-neutral payment policies are not a temporary trend—they are the foundation of a long-term reimbursement shift. Providers that adapt their claims pricing strategy now will be better positioned to navigate reduced rates, prevent underpayments, and maintain compliance. In 2025–2026, success will hinge on data-driven claims pricing, accurate POS coding, and proactive revenue cycle management.

Learn how Medicare’s site-neutral payment policies for 2025–2026 impact hospital outpatient and ASC claims pricing, and how providers can adapt to protect revenue. Prepare For Site-Neutral Changes! Contact us now!