Americans are struggling with an affordability crisis and rising health care costs, yet our health care system is full of wasteful spending that does not improve people’s health. One prime example of this is when big health care corporations make more money by driving patients to get care at outpatient departments, where the cost of care is significantly higher than at physician offices for the same services.
This problem is rooted in how Medicare pays for outpatient care across sites of service in ways that promote care delivery in more expensive settings. Since commercial insurers and Medicaid often adopt Medicare payment policies, the broken payment incentives in Medicare are amplified across payers.
A particularly problematic result of this payment disparity is when large hospital corporations take advantage of site-specific payment differences by buying up doctors’ offices and “rebranding” them as hospital outpatient departments so they can charge more for care. This practice decreases competition and leads to increased consolidation among large hospital corporations and physicians, driving higher health care prices and unaffordable care. For families and individuals, these increasing prices mean higher premiums and higher out-of-pocket costs, including being charged “facility fees” that are typically associated with hospital visits even when care is provided outside a hospital.
Congress has the power to fix this. Bipartisan support is building for federal policymakers to enact comprehensive “site-neutral” payment reform that fixes underlying payment disparities and eliminates the ability of big hospital corporations to game Medicare’s payment system.