Gaming the System: How Hospitals Are Driving Up Health Care Costs by Abusing Site of Service

Health care providers should be reimbursed at a level that supports the most efficient, highest quality care irrespective of the location in which it is provided – this is a foundational principle in the efficient allocation of resources and shifting to a value-based health care system. However, underlying payment differentials are at odds with ensuring America’s families receive affordable, high-quality care and the improved health they deserve.

This report discusses how hospitals have leveraged site of service payment differentials to push the delivery of routine care to higher cost care settings, tack on huge facility fees and drive up health care spending with no meaningful improvement in quality or safety. This is directly leading to higher prices in Medicare and private insurance and higher out of pocket costs for individuals and families.

However, there is a bipartisan solution to these abuses, and it is time for Congress to enact comprehensive site neutral payment policy. This is a critical step in lowering health care costs and aligning the business interests of the health care sector with the health and financial security of our nation’s families.