CMS seeks to cut $260M in imaging spending through ‘site-neutral’ reforms

The Centers for Medicare & Medicaid Services is seeking to cut over $260 million in spending on medical imaging next year using “site-neutral” payment reforms. 

CMS made the announcement as part of the 2027 Hospital Outpatient Prospective Payment System proposed rule, released Thursday. The agency said it hopes to control “unnecessary” increases in the volume of clinic visit services furnished at certain off-campus hospital departments.

Federal authorities are seeking to move more care to physician offices, where it can be delivered cheaply. CMS previously did so for certain drug-administration services and is now proposing to expand these reforms to imaging exams delivered without contrast. 

“Medicare and patients should not be charged more for an imaging test solely because it is done in a hospital setting rather than a standalone clinic,” CMS said in a fact sheet released July 2. 

Under current policy, Medicare beneficiaries may face higher copays for imaging services such as X-rays or MRIs, based on whether they are delivered in a hospital versus another outpatient facility. Such payment differentials can “encourage health systems to shift services to higher-cost settings,” CMS said, often “without a clinical need for doing so.” This also may spur greater consolidation in the industry, motivating hospitals to “acquire independent physician practices to increase their Medicare prices.” 

To combat this, CMS will use its statutory authority to help control “unnecessary outpatient services volume” by equalizing payment rates for imaging between physician offices and other “off-campus, provider-based departments.” Same with previous changes applied to the administration of drugs, CMS said it is exempting rural, “Sole Community Hospitals” from this new imaging policy. 

The agency notes that these noncontrast scans are often delivered in high volumes, with their low-intensity nature easily allowing them to be provided in freestanding physician offices. CMS gave the example of echocardiograms, with Medicare paying approximately 294% more for these heart exams at hospital settings when compared to offices. Authorities estimate the changes could reduce Medicare spending on imaging by about $260 million in 2027 alone. This would include about $190 million in Part B savings and another $70 million in reduced premiums paid by patients. 

“This policy helps ensure that beneficiaries are not subject to higher premiums and cost sharing based solely on the site at which care is furnished,” CMS said. 

The American Hospital Association—a longtime critic of site-neutral reforms—expressed “concern” about these imaging policy updates in a statement shared July 2. 

“Treating hospital outpatient departments as equivalent to other care settings ignores the unique role they play in serving patients with greater medical and other needs,” said Ashley Thompson, the AHA’s senior VP of public policy analysis and development. “Compared with independent physician offices, hospital outpatient departments disproportionately care for patients with more complex health conditions, higher rates of disability, and those from rural or underserved communities. Payment policies should recognize these differences to avoid undermining access for the patients who rely most on hospital-based care.”

The Radiology Business Management Association also expressed concern about the proposal on Thursday. It noted this this is “not a small or niche subset" of noncontrast advanced imaging procedures. For the affected outpatient hospital claims, CMS would move payments to the existing physician fee schedule-equivalent rate, generally 40% of the otherwise applicable Outpatient Prospective Payment System amount. 

“Under OPPS, CMS has proposed a significant and complex change to payment for many imaging services, and its implications are widespread,” Linda Wilgus, co-executive director of the RBMA, told Radiology Business July 2. “We will review the proposal closely with our members to better understand its potential effects on patients, imaging capacity, and access to care.”

The American College of Radiology also issued a preliminary summary of the rule on Thursday. ACR highlighted Medicare’s proposal to increase outpatient hospital payment rates by 2.4% with a conversion factor of $102.004. The 723-page proposed rule also includes several other imaging-related provisions, ACR noted. These include updated Ambulatory Payment Classification assignments for certain imaging services, a new payment framework for “software as a medical service,” and continued separate payment for high-cost diagnostic radiopharmaceuticals. 

“ACR is continuing to review this rule and will generate a detailed summary of major provisions in the coming weeks,” the college said in a July 2 news update.