In a time when the healthcare system faces unprecedented challenges, bipartisan reform emerges as a beacon of hope to combat the growing issue of healthcare monopolization. One key factor driving these costs is the consolidation in the healthcare market, leading to reduced competition and higher prices for consumers. To address this issue, proposals for site-neutral reimbursement payments based on the care provided, rather than facility ownership, are gaining bipartisan support in Congress. Continue reading to learn our own, Dr. Richard A. Kube’s thoughts!
Rising health care costs are a major concern for most Americans. A Pew poll from earlier this year found 64 percent of Americans consider health care affordability a “very big problem in our country today.” That includes majorities of both parties—54 percent of Republicans and 73 percent of Democrats. Our country may struggle with division and polarization, but it’s clear that health care is an area where bipartisan reform is possible.
One of the key drivers for rising prices is consolidation in the health care market—when a smaller number of providers control a greater share of the overall market. Consolidation leads to less competition and therefore higher prices for consumers.
In recent years, health care markets big and small have become more consolidated. Researchers at the University of California, Berkeley found that from 2010 to 2016 the number of metro areas in the United States with high concentration of primary care providers increased by 85 percent. They also found 65 percent of metro areas were highly concentrated for specialist providers. All the while, the American Medical Association reports record-low numbers of physicians in private practice.
The rise of consolidation and decline of small private practices did not happen by chance. It was the unintended consequence of government policies, such as Medicare’s reimbursement rate, which pays large hospitals and hospital systems more than small doctor offices for the same care. This payment differential benefits large hospital systems, which buy up small doctor practices and charge consumers higher prices by simply affixing the company name to an existing facility’s front door.
A report from the American Enterprise Institute found that “for a 30-minute office visit, the physician fee schedule payment rate for calendar year 2017 was $109.46 for a new patient, while if delivered in a hospital setting, the total would be 68.5 percent higher or $184.44.” This massive difference in reimbursement for the same service not only distorts the market, but, according to the researchers, it is “harmful to patients, who experience higher [Medicare] Part B coinsurance amounts due to bigger bills for the same clinical service.”
Consolidation practices increase prices on non-Medicare patients too. The UC Berkeley study found “price increases often exceeding 20 percent” after mergers. A 2023 Harvard/National Bureau of Economic Research study found that “prices paid to health system physicians and hospitals were significantly higher than prices paid to nonsystem physicians.” When operating under a hospital logo, physician revenue went up by 26 percent despite providing the same services. To cover that increase in costs, the average American will have to foot the bill through higher co-pays and out-of-pocket expenses, higher insurance premiums, or both.
All of this can be resolved by ending two-tier Medicare reimbursement policies. Instead, the program should implement site-neutral reimbursement payments based on the care provided, not facility location or ownership.
Site-neutral payment would put an end to the unfair policies that promote consolidation and encourage higher prices. Proposals to do so in Congress have support among Republicans and Democrats. Several congressional committees are now debating a health reform package that includes provisions to establish site neutrality in limited circumstances. That would be a vital first step, one which physicians across the country hope will soon expand to other services. After all, what could be more fair than reimbursing providers the same amount for the same service?
In light of the fiscal challenges facing Medicare, including insolvency of its Hospital Insurance Trust Fund, it makes sense to cut program costs and save taxpayers money. The horrors of consolidation over the past decade give even greater urgency to swift action. Health care reform is necessary and, fortunately, reforms like site-neutrality can be simple and bipartisan.
Richard A. Kube II, MD, FACSS, FAAOS is CEO and Founder of Prairie Spine & Pain Institute. He has served several years on the Coding and Reimbursement Task Force for the International Society for the Advancement of Spine Surgery.