Today, Americans for Tax Reform joined a coalition letter in support of site-neutral payments and service billing transparency in commercial health insurance. The letter, led by Americans for Prosperity, was signed by an ideologically-diverse group of 21 organizations and/or individual policy experts.
Currently, Medicare pays hospital-owned facilities up to 217 percent more than independent medical practices and other outpatient facilities for the same exact services. This has led to hospitals buying up smaller physician practices and charging patients – and Medicare – higher rates than they had previously been made to pay.
As the letter explains, these subsidies have led to a dramatic increase in the share of physician practices that are hospital-owned and have increased costs for patients:
“These wasteful subsidies have dramatically contributed to hospitals buying up community physician practices and reducing patient choices. Between 2013 and 2018, the share of physician practices that were hospital-owned more than doubled from 14 percent to 31 percent. By 2020, over half of physicians worked directly for a hospital or worked at a physician practice that was owned by a hospital, according to an analysis from the American Medical Association.
As hospitals buy up physician practices, they use market power and “dishonest billing” to raise prices for patients and taxpayers. “Dishonest billing” is when hospitals secretly reclassify a doctor’s office they own as a hospital-based setting in order to charge patients and taxpayers higher prices. An analysis by Northwestern University found the price of physician services increases 14 percent after a hospital purchases a physician practice.”
According to the CBO, these reforms could save taxpayers a whopping $140 billion over 10 years. In fact, the Blue Cross Blue Shield Association estimated that the savings for Medicare, private insurance premiums, and enrollees’ out-of-pocket costs would total around $471 billion over the next 10 years.
All lawmakers should support these commonsense reforms.