What effect does the site of service differential typically have on payments?

The site of service differential typically leads to a reduction in payments for services performed in certain facilities, such as outpatient settings compared to inpatient care. This differential is grounded in the idea that different settings incur different costs. For instance, services provided in a physician's office may be reimbursed at a different rate than the same services performed in a hospital outpatient department. The rationale behind this is often tied to cost management and aligning reimbursement with the lower costs of providing care in outpatient settings versus hospital environments. By implementing this differential, the Centers for Medicare & Medicaid Services (CMS) aim to encourage cost-effective care by providing lower payment rates to more cost-efficient service sites.

The other options do not reflect the typical outcomes of the site of service differential; therefore, they do not accurately represent the effects on payment levels.