September 3, 2025- A new study released by the American Hospital Association (AHA) shows that Medicare patients who receive care in a hospital outpatient department (HOPD) are more likely to come from geographically isolated and medically underserved communities and be sicker and more complex to treat than Medicare patients treated in independent physician offices (IPO).
Specifically, the study found that Medicare patients — including Medicare patients with cancer — who are seen in HOPDs are more likely to be:
- From rural and lower-income areas.
- Living with more severe chronic conditions.
- Dually-eligible for both Medicare and Medicaid.
- Previously hospitalized or cared for in a hospital emergency department.
- Under 65 and eligible for Medicare based on disability.
The findings of this new study — conducted for the AHA by KNG Health Consulting — reinforce prior research on this topic and underscore why reimbursing hospitals and health systems the same as IPOs would put patient access to care at risk. Proposals under consideration by policymakers to do so — often referred to as “site-neutral” payment policies — fail to recognize the many legitimate and important differences in the types of services hospitals provide — as well as the types of patients and communities hospitals serve — compared to other providers. Unlike other providers, hospitals maintain standby capacity for natural and man-made disasters, public health emergencies, other unexpected traumatic events, and the delivery of around-the-clock complex and emergency care to all who come through their doors, regardless of ability to pay or insurance status. They also must comply with higher regulatory requirements and safety standards than IPOs.
Despite increased expenses for hospitals in delivering care to patients, Medicare reimbursement continues to lag behind inflation — covering just 83 cents for every dollar spent by hospitals in 2023, resulting in over $100 billion in underpayments, according to AHA analysis of AHA Annual Survey data. From 2022 to 2024, general inflation rose by 14.1%, while Medicare net inpatient payment rates increased by only 5.1% — amounting to an effective payment cut. Additional site-neutral cuts will exacerbate the challenges hospitals are experiencing and lead to more hospitals reducing services or closing.
For a full copy of the study, visit the AHA’s website.