CMS Proposes Medicare Site-Neutral Imaging
CMS proposes equalizing imaging payments between hospital clinics and doctor offices to cut costs and reduce incentives for hospital consolidation.
The Centers for Medicare and Medicaid Services (CMS) has proposed a new rule to stop paying hospitals more than doctor's offices for the same imaging scans. The agency estimates this change could save Medicare $260 million in its first year, with patients saving another $70 million through lower coinsurance costs.
The proposal is part of the 2027 Outpatient Prospective Payment System (OPPS) rule. It targets "site-of-service" price differences. These differentials currently pay hospital clinics more for services like MRIs and CT scans, even when performed in off-campus departments. CMS argues there is little evidence this higher payment buys better quality.
According to the Niskanen Center, which analyzed the plan, these price gaps are significant. The think tank's review of proposed 2026 rates shows hospital clinic prices exceed physician office prices for every imaging service not yet subject to site-neutral payment.
| Service Description | Hospital Clinic Price | Physician Office Price |
|---|---|---|
| Breast Ultrasound | $120 | $84 |
| Bone Density Scan | Nearly 3x more expensive | Lower cost |
| Heart Scan | $429 more expensive | Lower cost |
These higher prices include "facility fees" for hospital overhead. The Medicare Payment Advisory Commission has previously suggested imaging services are ideal for "payment rate alignment across ambulatory settings." CMS appears to be following that advice.
Incentives for Consolidation
Critics say the payment differentials drive vertical consolidation in healthcare. They incentivize hospitals to buy independent physician practices. The goal is to capture the higher fees for imaging services billed under hospital ownership.
One study cited by the source linked changes in hospital ownership of practices to a more than $40 million increase in Medicare spending for just five common imaging services. Price concerns extend beyond Medicare. A recent analysis of the commercial insurance market found hospital-employed radiologists receive professional rates 43 percent higher than independent radiologists.
The Niskanen Center states that imposing site-neutral payments could curb this acquisition trend. Eliminating the financial incentive might preserve a more competitive market.
Addressing Opposition
Opponents of site-neutral payment argue hospital outpatient departments deserve higher reimbursement. They cite more complex patient caseloads. However, research suggests the difference in patient complexity between settings is small for the services targeted. CMS is explicitly proposing neutrality only for imaging without contrast, which are generally lower complexity.
Other critics contend the policy could strain hospitals under financial stress, especially in rural areas. CMS notes the rule does not apply to critical access hospitals, which make up more than half of rural hospitals. The agency also proposes exempting rural sole community hospitals. "The hospitals that remain are therefore unlikely to be rural and financially strained," the analysis states, as having a separate outpatient department implies sufficient revenue.
This imaging proposal builds on earlier CMS actions. The agency expanded site-neutral payment for drug administration services in the 2026 OPPS final rule. That followed the implementation of site-neutral payments for clinic visits after the 2019 rule.
Phasing Out the Inpatient-Only List
Alongside the imaging change, CMS is continuing to phase out its Inpatient-Only (IPO) list. This list has historically blocked certain procedures from being performed in lower-cost outpatient settings like ambulatory surgery centers.
The agency is now proposing to eliminate an additional 637 procedures from the list. This represents roughly 37 percent of the original IPO list. The procedures span various clinical families, with the largest categories including abdominal, peritoneal, biliary, and urological procedures.
This is the second year of a planned three-year phaseout. The move aligns with a broader push to allow high-value care in the most appropriate and efficient setting.
In Congress, efforts on site-neutrality have been more scattered. The Consolidated Appropriations Act of 2026 mandated unique billing identifiers for off-campus departments, a tool to help enforce site-neutral policies. Several bills have been introduced but none have passed. In the absence of comprehensive legislation, the Niskanen Center supports CMS using its regulatory authority to expand these payment reforms.
