Illustration: Tiffany Herring/Axios
CBO is throwing cold water on a common criticism of plans to overhaul hospitals' Medicare payments: that the facilities would simply raise prices for commercial insurers to offset their losses.
Why it matters: The CBO comments give a bit of a boost to site-neutral payment proponents and reflect continued interest in the idea from a key House chairman.
What they're saying: House Budget Committee Chair Jodey Arrington asked the CBO about the issue in recently published questions for the record.
- His committee and others have explored the case for having Medicare pay the same for outpatient services regardless of where they're delivered.
- "Does CBO believe that site-neutral payment reform in Medicare would lead to increased commercial market prices?" he asked.
- CBO's reply about a possible cost shift was essentially no.
- "From the perspective of economic theory, it is unclear why hospitals would negotiate higher prices with private payers only after they experienced payment reductions from public payers," the agency wrote.
- "Therefore, in CBO's view, expanding Medicare's use of site-neutral payments … would not increase the prices paid by commercial insurers," it added.
The bottom line: CBO's skepticism doesn't mitigate other potential drawbacks to site-neutral payments, like the effect on rural hospitals.
