Lawmakers and healthcare CEOs agree that the affordability crisis in healthcare is deepening.
But that’s about all they can agree on. On Tuesday, lawmakers pointed the finger at the CEOs of prominent health systems, arguing hospitals play a key role in relentlessly rising healthcare prices.
Lawmakers highlighted how hospital prices have skyrocketed over the last two decades, surpassing other sectors of the economy. However, health system CEOs were quick to defend their prices, arguing they’re justified in the face of growing cost burdens.
The hearing comes a few months after healthcare insurers faced the same committee to answer for their role in the healthcare affordability crisis. Insurers largely blamed hospitals, arguing they were the true culprits behind rising prices.
Committee Chairman Jason Smith, R-Mo., warned that lawmakers weren’t interested in shifting blame again, nor “hearing about how the high prices your businesses charge are somehow someone else’s fault.”
“The blame game didn't work with insurers, and it won't work today with us,” he said. "Simply put, hospitals are charging an insane amount for care."
Lawmakers claimed that healthcare providers are using various methods to increase prices unfettered — from large mergers that enable market consolidation and curb competition to fighting site-neutral payments that aim to make pay for healthcare services consistent across care sites.
For their part, the CEOs of HCA Healthcare, CommonSpirit Health, New York-Presbyterian and ECU Health denied using these methods to drive up prices, arguing instead that onerous government regulations, administrative costs and a sicker population left them with little choice but to boost prices.
Health system CEOs bemoan cost drivers, ask for relief
During the hearing, executives said that administrative and regulatory burdens, as well as the rising labor, technology and uncompensated costs, were hampering their ability to rein in costs.
Wright Lassiter III, CEO of the Catholic nonprofit health system CommonSpirit, noted that healthcare providers must comply with a plethora of federal and state regulations, which he said can be duplicative or overlapping. Ensuring compliance with numerous laws and reporting requirements raises hospital expenses.
“The regulatory burden for CommonSpirit adds another $1 billion of cost to our expenses on an annual basis,” Lassiter said. “Those are resources that otherwise could be placed directly towards patient care.”
Lassiter urged the committee to standardize the process by which providers and insurers request and transmit clinical information, reduce and simplify the number of quality and efficiency measures that providers must report to multiple agencies and create a one-claim system for Medicaid.
In addition to administrative complexity, health system CEOs said they were forced to raise costs in order to care for a greater number of uninsured patients. Uninsured patients drive up uncompensated care, creating a significant cost burden for providers, they said.
The number of uninsured Americans has been ticking up in recent years after hitting all-time lows in 2023. Cuts to federal health programs from the Trump administration are expected to raise the U.S. uninsurance rate —something Democratic lawmakers were quick to point out during the hearing.
“It's recent Republican policies that are making health care affordability worse today, when you cut a trillion dollars from the health care system, it forces providers to cut services and in some cases, shut down altogether,” said Rep. Mike Thompson, D-Calif..
What’s more, patients in the U.S. are sicker and more complex on average, according to Sam Hazen, CEO of for-profit hospital operator HCA Healthcare, forcing hospitals to spend more money on patient care.
“The patients we're taking care of are more complex and require more services, technology and new methods, new research,” he said. “ I think it's the patient population … They're sicker —and we talked about that earlier —with complications, obesity, diabetes.”
Debate over site-neutral payments, rural classification
Lawmakers also skewered executives for opposing site-neutral payments. While bipartisan interest remains in reforming the payments, which would mandate that Medicare pay hospital outpatient departments the same as physician offices, Congress has yet to enact comprehensive legislation.
Part of the problem is pushback from health systems, lawmakers said during the hearing. Hospitals have lobbied aggressively against the reforms, arguing that paying hospital-owned departments more is justified because they take on higher cost burdens.
But lawmakers said during the hearing that the pay difference incentivizes hospitals to acquire physician offices and increase healthcare prices.
“Right now, Medicaid, Medicare and commercial payers generally pay significantly more for care provided at an outpatient facility that's owned by a hospital compared to the exact same facility if it were owned by an independent doctor,” said Rep. Ron Estes, R-Kan.
“Because of this, when large hospital systems buy up independent practices, they routinely add huge facility fees onto the regular outpatient services,” he said. “In fact, patients can end up paying up to four times as much for routine care just because a hospital acquired the clinic, even though they see the exact same doctor.”
Executives said they would work with the committee on site neutrality, but defended the current payment structure.
“Hospitals also will take care of all patients that show up, regardless of what their payer is, and that's different than physician-owned places,” Dr. Brian Donley, president and CEO of New York-Presbyterian said.
Lawmakers also sparred with executives over what they say is hospitals’ misuse of CMS’ rural provider classification, which allows health systems to glean higher Medicare reimbursement rates and benefits reserved for rural hospitals.
Research has found a growing number of urban hospitals are using the dual-classifications, which could increase Medicare spending even as many rural facilities are at a high risk of closure. Over 40% of all acute care, non-critical access hospitals in the U.S. used this dual classification in 2023.
Congressmen zeroed in on New York-Presbyterian, whose flagship hospital is dual- classified as a rural provider, despite being located in the decidedly non-rural midtown Manhattan.
Donley argued that New York-Presbyterian's deserved the designation because it serves as a referral center for rural facilities under federal guidelines.
“We see thousands of patients referred from rural hospitals when those patients and those doctors have nowhere to turn,” he said.
Donley added that the hospital saw 8,000 patients through these rural referrals last year.
Still, that figure is just a fraction of the 2 million patients seen at New York-Presbyterian.
“People in rural areas have a lower life expectancy rate than those in urban areas because the dollar is not going into rural areas and they are dying... That is a broken system, which we have to address,” he said. “Healthcare follows the dollar.”
