Healthcare costs remain a top economic concern for voters, with a majority of voters considering it extremely important heading into the midterm election, according to a recent KFF poll. For over 180 million Americans who get healthcare through the commercial insurance market, premiums, and out-of-pocket costs continue to rise — largely due to exorbitant hospital prices.
Fortunately, the federal policymakers from both parties are taking initial steps to confront the practices that allow corporate hospital systems to drive up costs, restrict competition, and weaken employers’ purchasing power. By challenging anti-competitive contracts, reducing site-of-care differences, strengthening transparency requirements, and more, Washington is showing signs of life on hospital accountability, especially in Medicare. However, working families also need targeted action that addresses the high and rising prices they pay in the commercial market, which impacts a far greater number of Americans.
Hospital systems charge substantially higher prices for the same services performed in hospital-owned outpatient departments compared to independent physician practices, which in turn encourages consolidation and further drug markups.
- The Centers for Medicare & Medicaid Services’ (CMS) 2027 Hospital Outpatient Prospective Payment System proposed rule would take another step towards leveling the playing field, paying the Medicare Physician Fee Schedule equivalent rates for certain imaging services in off-campus hospital departments (“site-neutral payment”).
- The same rule also contains a provision that would more closely align Medicare payments for drugs purchased through the 340B Drug Pricing Program with hospitals’ acquisition costs, reducing the significant markups that Medicare beneficiaries and taxpayers currently pay.
The Department of Justice (DOJ) has challenged anti-competitive contract provisions used by dominant hospital systems that drive up costs by preventing employers from developing lower-cost health plans or prioritizing providers offering low-cost, high-quality providers.
- The DOJ filed related cases against OhioHealth and New York-Presbyterian, challenging restrictions on plan designs that direct patients toward lower-cost competitors.
- In June, the DOJ reached a proposed settlement that would prohibit OhioHealth from using contract terms that limit employers’ and insurers’ ability to develop lower cost health plans.
- A recent report from the White House’s Council of Economic Advisors estimates that eliminating anticompetitive practices could reduce some cities’ hospital prices by 18% and employer-sponsored plans by 6.5%. Across the country, employers and workers could save an estimated $45 billion on premiums each year.
Congress and the federal government are showing bipartisan interest in making healthcare prices and hospital finances more transparent.
- CMS recently took a step towards introducing more claims data transparency in 340B, releasing a memorandum requiring Medicare Part D plans to preserve data on which prescriptions were filed as 340B.
- In August, the full House Energy and Commerce Committee unanimously advanced the Lower Cost, More Transparency Act, which would strengthen healthcare price transparency requirements. In July, the Senate HELP Committee overwhelmingly approved the bipartisan Patients Deserve Price Tags Act, requiring providers and insurers to publish negotiated rates and cash prices. “There is no way to lower healthcare costs unless the consumer knows the price. Period. End of story,” Senate HELP Committee Chair Bill Cassidy (R-LA) said following the markup.
- The House Ways and Means Committee has also advanced the Tax Exempt Hospital Transparency Act, with proposals to require tax-exempt hospitals to disclose more about their financial assistance, community benefits, service lines, advertising, and 340B participation. Given that these hospitals receive substantial tax advantages and other public benefits, employers and taxpayers deserve to know what communities receive in return.
These developments are encouraging. However, Medicare reforms and individual enforcement actions alone will not deliver the relief employers and working families need.
Purchasers in the commercial market still lack meaningful transparency or data into hospital prices and the 340B program, do not enjoy standard or widespread protection from hospital monopolies abusing their market power via anti-competitive contracts, and are forced to pay significant markups for services just because a large hospital owns the building.
Policymakers should take comprehensive action to give employers the data and leverage they need to make informed purchasing decisions and bring costs down.