Republicans demonstrated a commitment to reforming government healthcare programs in their major policy win this year – the One Big Beautiful Bill. But they shouldn’t rest on their laurels while others continue to take advantage of the government’s generosity with taxpayer dollars.
Consolidated hospital organizations have continually exploited patients and the government alike by marking up the price of treatments for patients on Medicare.
Currently, hospitals are permitted to charge Medicare patients more for the same treatment offered for less at an independent doctor’s office. Closing this loophole, known as “site-neutral” payments, would save $150 billion over the next decade. It also means patients would know they are getting a fair rate at hospitals and independent doctor’s offices alike.
Patients, doctors, and the government agree that healthcare pricing should be transparent. The only dissidents are the hospitals–nearly two-thirds are not fully compliant with a Trump price transparency executive order that has been in effect since January 2021. .
The price differences for treatments at hospitals compared to doctors' offices aren't chump change. On average, the government reimburses hospitals up to 125% more for the same treatment compared to independent doctors' offices.
Pricing for treatments and tests for potentially debilitating conditions like cancer, heart disease, and genetic conditions can range in the hundreds of dollars between hospital and independent practices. You’d think that $150 billion in savings would stimulate chants of “why pay more?” for a Medicare program that continually faces insolvency.
But an important distinction here is that not all hospital-owned facilities are by definition “hospitals.” A new report from the National Bureau of Economic Research details larger hospital networks that bought nearly half of all private doctor's offices in the country. HCA Healthcare, the largest hospital network in the country, owns approximately 2,500 care facilities across the United States – including a slew of formerly-independent practices.
These doctors offices owned by hospitals – designated Hospital Outpatient Departments (HOPDs) – charge the same 125% price markup.
It makes financial sense why hospitals continue to acquire smaller practices in large numbers. More patients on government health insurance means a larger check from Uncle Sam, even if the procedure could be done for cheaper elsewhere.
The biggest losers are the patients under these organizations' care. Studies claim that hospital care does not have measurably higher quality than the same care at an independent practice. Zooming out, this constant consolidation of hospitals also removes competition from the healthcare system in the long run, reducing quality of care and increasing costs.
It’s time for lawmakers, specifically Republicans, to step in and correct this oversight.
With the OBBB, Congressional Republicans opened the door to preserve government programs for the most needy by cleaning up some of the more fraudulent portions of healthcare policy . Republicans have also led in interrogating executives at drug middlemen like CVS that siphon drug discounts away from patients and found aisle-crossing agreement.
Republicans are taking a stand for access to quality and cost-effective care, and they should not tolerate bad actors exploiting any part of the system for financial gain.
Hospitals should be the next target of scrutiny, as they have had an outsized effect on federal healthcare policy for far too long. The American Hospital Association was the fourth-highest spender on federal lobbying last year, totalling nearly $30 million between both Democrats and Republicans. They’re putting pressure on lawmakers because they know that reforms like site-neutral are popular. A Republican bill and a bipartisan policy framework in the Senate serve as proof that this policy has staying power.
These conglomerates will try to do anything to derail these popular reforms – including invoking rural hospital closures as a defense. But the savings from site-neutral reforms will go a long way to keep rural hospitals afloat. Additionally, there are alternative ways to support rural hospitals without penalizing those who reside in higher-cost areas.
Site-neutral payments can become a reality, but the leading party in Congress needs to step up to the plate. That is, if they truly care to keep Medicare solvent.
Marion Mass, M.D. is a Bucks County pediatrician and the co-founder of the Practicing Physicians of America.
