The "Preventing Hospital Overbilling of Medicare Act" aims to lower Medicare costs by preventing hospitals from overbilling for services provided at off-campus locations, ensuring fair and accurate billing practices.
Victoria Spartz
Representative
IN-5
The "Preventing Hospital Overbilling of Medicare Act" aims to reduce Medicare overspending by ensuring that off-campus hospital locations are billed at the appropriate, lower rate. It achieves this by removing certain exceptions that allow hospitals to bill at higher rates for services provided at these off-campus locations and by requiring these locations to have unique identifiers for billing purposes. The Act also directs the Secretary of Health and Human Services to promote similar billing practices among private insurers. These changes are intended to take effect starting January 1, 2026.
New Bill Targets Hospital Overbilling: Off-Campus Clinics to Get Separate IDs, Lower Medicare Rates by 2026
This new piece of legislation, the "Preventing Hospital Overbilling of Medicare Act," is designed to tackle a common frustration: getting charged higher hospital rates for services at an off-campus clinic just because it's owned by a hospital. The bill aims to make sure Medicare pays rates that reflect the actual site of service, rather than the more expensive main hospital campus, for many outpatient services. It also sets up new rules for how these off-campus locations are identified and how they bill, not just for Medicare, but potentially for private insurance too.
Ending the 'Hospital Rate' Surprise at Your Neighborhood Clinic?
Ever been to a doctor's office or clinic that's part of a big hospital system but located in a separate building, maybe even miles away? You might have noticed the bill was higher than expected, reflecting hospital-level charges. This bill targets that. Starting January 1, 2026, it plans to phase out certain exceptions that currently allow these "off-campus outpatient departments" to bill Medicare as if the services were provided at the main hospital (Section 1833(t)(21)(B) of the Social Security Act). The idea is to promote "site-neutral payments," meaning the payment better reflects the lower costs typically associated with an independent clinic rather than a full-service hospital.
The bill specifically removes an exception for off-campus emergency departments even sooner, before January 1, 2026 (Section 1833(t)(21)(A) of the Social Security Act). It also strengthens the Secretary of Health and Human Services' ability to stop hospitals from using the main hospital's billing rates for services actually performed at these satellite locations (Section 1833(t)(2)(F) of the Social Security Act). For you, this could mean that a routine test or specialist visit at a hospital-owned clinic down the street might eventually cost Medicare – and potentially your share of the cost – less.
New ID Badges for Clinics: How Billing is About to Change
To make this all work, the bill gets into the nitty-gritty of medical billing. By January 1, 2026, each of these off-campus outpatient hospital departments will need its own unique National Provider Identifier (NPI) (Section 1173(b) of the Social Security Act). Think of an NPI as a unique ID number for healthcare providers. Right now, a whole hospital system might use a primary NPI, making it harder to distinguish services at the main campus versus an affiliated clinic.
This change means that when these off-campus spots bill for services on or after January 1, 2026, they must use their new, separate NPI on the claim forms (specifically, the HIPAA X12 837P electronic form or the CMS 1500 paper form) (Section 1866(a)(1) of the Social Security Act). This isn't just for Medicare; the bill extends this rule to private health plans too. It states that providers can't send a claim to your insurance company, or try to make you pay, for services at these off-campus locations unless they use that location's specific NPI (new section 2799B10 in Part E of title XXVII of the Public Health Service Act). This aims to make billing more transparent and ensure the right, potentially lower, rates are applied based on where you actually received care.
Beyond Medicare: Pushing for Broader Billing Fairness
While the direct changes hit Medicare billing first, the bill also tries to nudge the private insurance market in the same direction. It directs the Secretary of Health and Human Services to ask the National Association of Insurance Commissioners (NAIC) – a group that helps create model laws for states – to develop a model act or regulation within six months of this bill's enactment. This model law would be designed to stop hospitals from inappropriately billing private insurance for services at these off-campus clinics at higher rates.
The goal is for this model act to allow insurance companies to reject claims if the off-campus clinic doesn't bill correctly using its separate NPI. The bill even points to Colorado House Bill 18-1282 as an example of what these rules could look like. That Colorado law already requires unique NPIs for different service locations to increase billing transparency. So, while not a direct federal mandate on private insurance nationwide, it’s a strong push to get states to adopt similar consumer protections. The real-world impact here will depend on how quickly the NAIC acts and how many states decide to adopt such a model.