In the realm of healthcare politics, a glaring power dynamic emerges: giant corporations, notably hospitals, wield disproportionate influence over policy decisions and spending. A new article in Inside Sources by Charles Sauer explores the contentious issue of “Site Neutral” payment reform, revealing how this policy discrepancy enables hospitals to charge exorbitant fees compared to independent physicians.

He writes:

“Politics is one of the few places where giant corporations can raise their hands above the rest of the class and immediately gain the ear of the government despite being known by the rest of the students as the classroom bully. 

Hospitals are using money from their billions in increased profits to run ads in a desperate attempt to keep a policy in place that pays them a multiple of what it pays their competitors and enables them to afford the luxury of such ads that private practices could never hope to broadcast. 

Despite the hardships this policy has created for taxpayers, business owners and employees, hospitals are claiming that they deserve this handout due to the higher costs of operating 24/7. This ignores the fact that a large part of these visits take place at outpatient facilities that were formerly private practices that do not operate under those same hours. 

The hospitals are acting like the student who brings the same apple as the rest of the students but expects the bigger voice. Given the current bipartisan push on Capitol Hill, it seems Congress has finally figured out that hospitals are one crony hand that needs to be ignored in the fight for teacher’s pet.

The policy that hospitals are frantically waving about is called “Site Neutral” payment reform. This is in reference to health policy that pays independent hospitals much more than independent doctors for the same services. So, if you have ever wondered why hospitals seem to be taking over all of healthcare — and they are — the current payment policy is the reason. Under the policy, hospitals can buy independent physicians, change the logo on the door, and immediately charge three times more than the already high prices we pay for medical care. They can then pay the doctor more, increase their own referral traffic and increase profit — all because they are arbitraging a poorly constructed policy.

Without this payment discrepancy, healthcare would be cheaper. And cheaper healthcare could help ease the burden on the more than 100 million patients who are in medical debt.

It may seem like a no-brainer, but hospital systems and major corporate health entities are not giving up this advantage. These financial giants are invoking vulnerable rural hospitals to justify their opposition to site neutrality. These arguments obscure the damage the two-tiered reimbursement system has done for patients, even as financiers cash in. The current policy has led to government-created monopolies, particularly in rural areas, that have restricted competition, increased prices and lowered access. The hospitals are asking politicians to ignore their constituents and the people hardest hit so they can take more luxurious vacations and eventually normalize higher pricing.

To put this into perspective, under the current policy, an independent physician would receive $164 for an ultrasound while a hospital can charge a whopping $339 for the same ultrasound. An independent physician would receive $146 for a biopsy while a hospital would receive $791. And, an office visit would cost $118 at an independent doctor, but after a quick change of door logo, that visit is now $186. This is bankrupting Americans.

I don’t blame hospitals for wanting this gift from taxpayers, but politicians should see the current policy and the ad campaign calling for moral outrage for what it is — extortion from the taxpayers.

Even worse, the evidence shows the effect on rural hospitals would be minimal. For example, 61 percent of rural hospitals are critical access hospitals exempt from proposed site-neutral reforms. Exempting these hospitals isn’t the optimal public policy, but given the sorry state of healthcare markets, it is an acceptable first step. Additionally, under the plan that is most likely to pass, the proposed reform only affects one-third of rural Medicaid spending.”

Read more at Inside Sources by clicking here.