Model Legislation

Section 1. Title. This Act shall be known as the Site Neutral Payment Policy Act.

Section 2. Purpose. The purpose of the Act is to ensure patients and the state are notified when hospitals acquire physician-owned medical practices, to protect the state’s taxpayers from the state paying substantially higher rates for equivalent outpatient health services, and to study and recommend if and how expansion of site neutral payment policies beyond Medicare and Medicaid, to commercial health insurers, would be implemented and benefit health care consumers in the state.

Section 3. Definitions.

In this Act:

1. “Health Care Consumers” means any entity or individual receiving or paying for health care services or health insurance premiums in the state.
2. “Hospital Outpatient Department” means a hospital department, unit, or clinic, where non-urgent ambulatory care is provided.
3. “Equivalent outpatient health services” means services that meet the Medicare Payment Advisory Commission’s principles for aligning payment rates across settings, as outlined in the Commission’s “Report to the Congress: Medicare and the Health Care Delivery System” (June 2013).
4. “Physician-Owned Medical Practice” means an independent medical practice, owned by physician shareholders.
5. “Outpatient Services” means medical procedures or tests performed in a medical facility that do not require an overnight stay.

Section 4. Site Neutral Payment Policies

1. Under this Act, the state’s Medicaid Program may set reimburse rates for hospital outpatient departments and hospital-acquired physician practices at the same rate as physician-owned medical practices for all equivalent outpatient health services where the service is not dependent on the hospital facility’s associated technologies, and in the absence of any evidence-based rationale.
2. Under this Act, hospitals must provide written notice about acquisitions of outpatient facilities or the transfer of health care providers into hospital employment to the Attorney General, the Department of Health and the state’s Medicaid program, along with each patient served by an acquired practice or transferred health care provider.
3. Under this Act, hospitals must notify the Office of the Attorney General, the Secretary of the Department of Health, and the Executive Director of the state’s Medicaid Program of any transaction through which the hospital will acquire a physician-owned medical practice, prior to the effective date of the transaction.
4. Under this Act, the State Department of Insurance, in consultation with the Attorney General, the Department of Health and the state’s Medicaid Program, shall consider the advisability, feasibility, and total cost savings to health care consumers in the state of expanding to commercial health insurers the prohibition on any higher or increased reimbursement rates or provider-based billing for hospital outpatient departments or any health care providers or physician-owned medial practices transferred to or acquired by a hospital.
   1. No later than one year following the effective date of this Act, the Department of Health in conjunction with the Department of Insurance, and in consultation with the Attorney General and the state’s Medicaid Program, shall submit to the House and Senate Committees on Health and Insurance recommendations on expanding to all commercial health insurers site neutral payment policies that would establish fair and equitable reimbursement levels for all outpatient health services, regardless of the ownership of the facility in which such services are provided.

[Section 5. Repealer Clause]

[Section 6. Severability Clause]

[Section 7. Effective Date]