Site Neutrality Or Site Destruction? Follow The Money, Not The Slogan

People keep asking us, “What is your stance on site neutrality?“

Here is the honest answer.

Site neutrality, as a basic idea, sounds fair. The same service should be paid roughly the same amount, no matter where it happens. Most people would agree with that. Most providers would too.

But that is not what the big commercial insurers are fighting for. Their version of “site neutrality” is something very different. It is a race to the bottom that mostly helps their profit margins and hurts communities, hospitals, and independent providers who actually take care of patients.

Let us break down what is real, what is spin, and what Arkansas Patients First PAC actually supports.

1. What Is Site Neutrality, Really?

The “site of care” is simply the place where you receive a service. For example:

A hospital outpatient department (clinic owned by a hospital system)
An independent clinic or physician office (outside of a hospital system)
An ambulatory surgery center (operating rooms not in a hospital)
Other outpatient locations (free-standing interventional suites, Cath labs, etc)

“Site neutrality” is the idea that insurance companies (payers) should pay the same (or similar) rate for the same service, no matter the site.

On the surface, this sounds like common sense. Why should a simple visit or procedure be paid two or three times more just because it happens inside a hospital building instead of an office down the street?

That basic question is fair. It is also true that the current system is skewed.

2. Yes, The System Is Skewed And Not Fair Today

Let us say this clearly.

For many services, hospital outpatient departments are paid far more than independent clinics or offices (through higher fee schedule rates and additional “facility fees” that can be charged).
For many services, they can be (for the majority of the population) provided outside of the hospital setting at a reduced cost today.
In some cases, hospitals receive over 200% of what a non-hospital provider would be paid for the same billed code.
Some very large hospital systems do aggressively leverage this inequitable design in our healthcare system, and do use the additional profits to gobble up independent provider practices.
Independent providers are often delivering equal or better care, in a safe setting, with highly trained staff, at a fraction of the cost.

So no, the current system is not fair or rational. It makes it harder for independent, community-based providers to survive and encourages everything to be absorbed into giant systems. We have already discussed how vertical integration is very detrimental to serving the community and to a patient’s finances.

We do not defend that imbalance. It needs to be fixed.

But here is the problem. You cannot fix a deeply skewed system with one blunt policy that simply cuts everyone down to the lowest possible rate overnight. That does not create fairness. That just creates damage.

3. Most Hospitals Are Not The Enemy

Some people in policy circles talk as if the hospital is always the wrong place to get care. That is nonsense and it is dangerous.

Three things are true at the same time:

Hospital outpatient rates are often too high compared to other sites.
Hospitals carry real and significant costs that no one else carries.
Hospitals ARE the right environment for certain high-risk patients that have a very high risk of need stabilization services after the procedure or drug administration. Starting in the right environment for certain patients, actually saves the patient the costs of ambulance services and ER admission costs.

Hospitals are required to:

Staff and maintain emergency departments and critical care units.
Keep specialists on call and ready, twenty four hours a day.
Comply with layers of safety, accreditation, and regulatory requirements.
Absorb large amounts of unpaid and underpaid care.

And despite what some bureaucratic talking points imply, the hospital is sometimes the most appropriate site of care, even when the procedure looks “low risk” on paper (because it is not based on the procedure, but the patient’s health condition, allergies, contradictions, and comorbidities).

For example:

Very fragile or complex patients may need immediate access to higher level care if something goes wrong, even during a simple procedure.
Some procedures carry a high risk of complication or hospitalization in real life, which makes the hospital the safest place for certain patient groups.

Real reform has to recognize that hospitals have both real costs and a real role. The goal should be to stop overpaying where it makes no sense, not to pretend all hospitals are just fancy office buildings.

4. Who Actually Wins In The Insurer Version Of Site Neutrality?

Now we get to the heart of it.

There is one large multi-state commercial insurance group, along with others, that loves to talk about site neutrality in public and in Washington. They dress it up as a “consumer protection” and “cost saving” measure.

Here is what they usually do not say out loud:

Their version of site neutrality almost never means raising underpaid providers up.
Their version always means cutting everyone down to the lowest fee schedule they can find.
Their version doesn’t consider the unique requirements of each and every patient and doesn’t acknowledge inherent complications known to all doctors.
Their version ignores real differences in cost, complexity, and risk between sites.
Their version assumes overnight changes will not decimate access to care in many communities.
Their version assumes all Hospitals are greedy and large systems – when in fact, many rural hospitals that would be impacted overnight are the ONLY safety net available for miles in many communities, and they are already struggling to keep the doors open.

When you cut hospital outpatient rates down to office rates overnight, you are not “leveling the playing field,” you are simply slashing payment.

And who pockets the biggest savings?

Not patients.

Patients might see tiny changes in cost share at best, and many will not see any meaningful difference. Many patients already don’t pay the hospitals for their out of pocket costs and depend on charity care, especially in rural Arkansas communities.
Deductibles and out-of-pocket maximums are still driven by plan design, which insurers control. Keep this in mind. This is important. The insurance companies ALREADY have levers to actually protect patients already without applying the lowest rate to everyone. If it truly were about the patient, then why is this not being used to protect the patient?

The largest winner is the insurance company, which pays less out and keeps more in. Then they buy more ads about how they are “lowering health care costs” while providers are asked to do the same or more with less.

5. If Site Neutrality Is So Great, Why Do Insurers Need A Law To Do It?

Here is a simple question that cuts through the PR:

If site neutrality, the way they define it (a race to the bottom), is such a wonderful idea, why have these companies not already done it on their own commercial plans?

Nobody is stopping them from:

Reducing certain hospital outpatient rates for their fully insured and self-funded portfolios.
Testing the impact in real markets.
Proving that access, quality, and outcomes are not harmed.

They do not do that, because they know what would actually happen:

Hospitals in many communities would refuse or restrict participation (being unable to break even).
Network adequacy would collapse in some regions (as safety-net hospitals shutter services).
Patients and local leaders would be furious about lost services and closed departments.

So instead, the big insurers want the federal government to do the dirty work for them.

They lobby hard for a sweeping site neutrality mandate so they can say:

“We did not choose this, we are just following the law.”

They get to:

Force providers into a race to the bottom.
Keep the savings.
Point the finger at Congress or regulators when communities lose access to care.

This is not reform. It is political cover for a massive transfer of dollars from care delivery to insurance company bottom lines.

6. What Real Site Neutrality Would Look Like

Most providers are not opposed to the principle that the same service should be paid similarly. What they oppose is fake neutrality.

Real site neutrality would:

Recognize that the current system underpays some sites and overpays others.
Move underpaid settings closer to hospital outpatient rates, instead of dragging everyone down to the lowest rate on paper.
Preserve reasonable differentials where cost, risk, and regulatory burden are genuinely higher.

If “site neutrality” meant:

Increasing office and ambulatory surgery center rates to better reflect their real costs, or
Setting tiered rates that are fair for each setting and do not punish one segment just because it is independent,

you would hear very little objection (except from the Insurance Companies).

If all providers were paid at fair (which is not defined as the lowest rate possible), sustainable levels that keep doors open and staff employed, there would be broad support.

But that is not the version being sold in insurer talking points and DC soundbites.

7. What Happens To Communities If We Race To The Bottom

If we let insurers cut rates to the lowest common denominator, here is what you can expect in real communities:

Hospitals that cannot slash their expenses overnight will shut down “low margin” service lines, even when those services are essential locally.
Rural and smaller communities will lose specialty care or surgery access entirely, not because the care is unsafe, but because the math no longer works.
Independent physicians who rely on hospital operating rooms or specialized staff for certain procedures will lose those partnerships.

We must remember there are good actor hospitals and honest collaborations all over this country.

Independent physicians often perform procedures in hospital settings for very good clinical reasons.
Hospital surgical staff have expertise that is not easily replaced in a stripped-down site.

Ripping that infrastructure away in the name of “savings” for insurance companies does nothing for patients. It just leaves Arkansas communities with fewer options, longer travel times, and worse outcomes.

8. Our Stance: Fix The System, Do Not Burn It Down

Arkansas Patients First PAC believes:

Yes, everyone should be paid fairly and transparently.
Yes, many services can be safely performed in more than one site of care.
Yes, we need to bring more logic and balance to payment policy.

But also:

No, site neutrality must not mean paying everyone at the lowest possible rate.
No, we should not gut hospital service lines and local access just to help national insurance carriers hit their financial targets and make investors more money.
No, we should not be fooled by a marketing campaign dressed up as reform.
No, we should not let the insurance industry tear up communities with a PR smear campaign and create division amongst good partners.

If site neutrality was truly a slam dunk idea the way insurers describe it, they would have already used their existing authority to roll it out in their commercial plans and shown us the results.

They have not, because they know the outcome would not be good for them once the public sees the impact.

9. What We Support Going Forward

Arkansas Patients First PAC supports site neutrality that is real, not rhetorical. That means:

Admitting that the current system is skewed and must be corrected.
Recognizing that hospitals have real additional costs and a critical role for high risk patients and complex procedures.
Rejecting any policy that simply cuts everyone down to the lowest number on a spreadsheet with no regard for community impact.
Designing payment models that:
1. Raise underpaid sites to sustainable, fair levels.
2. Maintain justified differences where cost and risk truly demand it.
3. Protect essential hospital and community services from being wiped out overnight.

Site neutrality should be about patients, not profit. It should strengthen access and fairness, not quietly funnel more money into insurance company reserves while blaming Washington for the mess.

So next time you hear “site neutrality” in a speech or an ad, ask yourself:

Which definition is being used? Are we talking about fair, balanced payment that keeps care in our communities, or just a race to the bottom that only benefits the people holding the purse strings?

At Arkansas Patients First PAC, we are fighting for the first one, and we will keep calling out the second one for what it is – a selfish PR smear campaign that creates division in the community, a race to the bottom for everyone, and only benefits insurance companies and their investors/owners.