Elevance Health Tightens Site-of-Care Billing to Curb Off-Campus Facility Fee Inflation

Elevance Health is moving to close a billing gap that has quietly inflated costs for payers and patients alike: services delivered at off-campus facilities but billed as if they occurred inside a hospital.

The insurer announced new policies requiring providers to identify the physical location where a service was actually performed. That location data will then be cross-checked against hospital addresses to catch discrepancies before claims are paid. The stated goal is straightforward. Reimbursement should match where care happens, not where a facility's billing address says it happens.

Catherine Gaffigan, M.D., president of health solutions at Elevance Health, framed the issue in blunt economic terms. "It's driving cost on both sides of the equation for no change in the quality of the care that's being provided or even the location of the care that's being provided," she told Fierce Healthcare. In other words, patients and payers are paying more for identical care, simply because of how a claim gets coded.

This is not a new complaint. Insurers have flagged the practice for years, but the financial scale of the problem has been hard to ignore. A 2023 analysis from the Blue Cross Blue Shield Association found that Medicare spent an extra $2.7 billion over three years on just four services when they were billed as hospital outpatient care rather than physician office visits, even though a physician's office could have delivered the same service. Patients bore a real cost too, with out-of-pocket spending running $411 million higher under the hospital billing arrangement.

Those numbers illustrate why "site-neutral payment" has become a rallying phrase across the payer industry. The core argument is simple: care of equivalent quality and complexity should not command a premium simply because it took place under a hospital's outpatient umbrella rather than an independent facility down the street.

Regulatory Momentum Builds Behind the Policy Shift

Elevance is not acting in isolation. Congress opened the door to structural change in March, when a bipartisan spending deal included a requirement that providers bill for services at off-campus sites using unique National Provider Identifier numbers. That mandate does not take effect until 2028, but it establishes the federal framework insurers have been asking for.

The Centers for Medicare & Medicaid Services has moved on a parallel track. Its proposed outpatient care payment rule for 2027 takes direct aim at site-neutral payments, a proposal that has already drawn strong pushback from hospital groups and providers who argue the changes threaten facility revenue tied to higher billing rates.

Gaffigan said this convergence of legislative and regulatory attention gave Elevance the confidence to move ahead of the federal timeline rather than wait for 2028. "I think many of us in the industry feel that that's where we should be, that we should not be paying more based on location, it should be based on the care that's being provided," she said. She described the alignment between payer action and regulatory scrutiny as "a great partnership with respect to addressing some of these longstanding opportunities."

That framing matters for how the industry reads this move. Elevance is not simply complying with a future mandate. It is getting ahead of one, building internal verification infrastructure now so that by the time the federal NPI requirement takes hold in 2028, the company already has systems in place that meet or exceed it. That is a meaningful operational bet, and it is not without cost. Building and maintaining address-matching and location-verification systems across commercial, Medicare Advantage and Medicaid lines is not trivial. Elevance is choosing to make that investment across 2026 and 2027, ahead of when it would be strictly required to.

The financial logic is easy to follow. If the BCBSA's $2.7 billion Medicare estimate is any indication of the broader market's exposure, even a partial recovery of misclassified billing across Elevance's own book of business could represent a material reduction in claims spending. For a payer managing medical loss ratios closely, that kind of structural cost containment is more durable than one-off contract negotiations with individual health systems.

There is a provider-side risk worth flagging too. Hospital systems that have relied on off-campus billing to capture higher facility fees will see that revenue stream narrow as verification tightens. That creates friction, and it echoes the pushback CMS has already faced on its own site-neutral proposal. Expect hospital associations to raise similar objections to Elevance's rollout as claims start getting flagged and reimbursement rates adjust downward for affected services.

What Investors Should Watch

The near-term signal to track is adoption speed across Elevance's book of business. The company says its policy will phase in through 2026 and 2027 across commercial, Medicare Advantage and Medicaid segments, and the pace of that rollout will determine how quickly any cost savings show up in medical loss ratio trends.

Watch also for competitive response. If Elevance's verification approach proves effective at curbing billing leakage, other major payers have every incentive to adopt similar cross-checking mechanisms well before the 2028 federal NPI deadline forces their hand. That would turn a single-company policy into an industry standard faster than the regulatory timeline alone would suggest.

Finally, keep an eye on provider pushback. Hospital systems have already lobbied against CMS's proposed site-neutral payment rule for 2027, and Elevance's move gives them a second front to contest. How that friction resolves, through litigation, contract renegotiation, or regulatory carve-outs, will shape whether this becomes a durable cost-containment win for payers or a drawn-out fight that dilutes the intended savings.