Elevance Health is launching a sweeping overhaul of its billing policies to curb what it describes as inflated costs for care provided at off-campus hospital departments. Starting between 2026 and 2027, the Indianapolis-based insurer will require hospitals to provide precise location data for every single patient encounter. By cross-referencing this information with known hospital addresses, Elevance intends to identify services rendered at satellite clinics or doctor offices and pay those claims at lower rates rather than paying premium hospital pricing.
The move targets a growing trend where hospitals acquire independent medical practices and reclassify them as outpatient departments, allowing them to tack on expensive facility fees for routine visits. Some research suggests these hospital-owned sites can charge upwards of thirteen times more than standalone physician offices for the same level of care. Dr. Catherine Gaffigan, president of health solutions at Elevance, stated that patients and employers deserve bills that accurately reflect where care was delivered, framing the shift as a necessary step toward making healthcare more affordable for its forty five million members.
However, the plan has sparked an immediate backlash from the American Hospital Association. Industry representatives argue that these unilateral payment cuts ignore the high overhead associated with running integrated health systems, including the mandate to treat all patients regardless of their financial status. Molly Smith, a vice president of policy at the AHA, warned that reducing reimbursements could force hospitals to shut down convenient off-campus locations entirely, ultimately jeopardizing patient access to essential services just to pad the insurer’s bottom line.
This conflict reflects a larger national debate over site neutral payments, a model where insurance pays the same rate for a service regardless of whether it happens in a hospital or a private clinic. Elevance is aligning itself with current regulatory trends seen in Washington, where recent federal spending packages and proposed rules from centers for Medicare and Medicaid Services suggest similar restrictions on how hospitals bill for imaging and drug administration. As policymakers push for greater transparency through 2028, the tension between corporate insurers and massive health systems continues to mount over who should shoulder the cost of clinical infrastructure.
