Unreasonable markups by corporate hospital systems increase prices

It's time for fair and transparent hospital pricing to make care more affordable for all.

Byline: David Merritt

We all know it: health care prices are rising at unsustainable rates. High costs are putting a strain on patients’ pocketbooks, and employers are often forgoing critical investments in their businesses. The Blue Cross Blue Shield Association (BCBSA) is fighting to make health care more affordable for all Americans.

A commonsense solution is to end pervasive billing practices by corporate hospital systems. They take over smaller, independent physician practices and mark up prices to unreasonable levels. That may help the corporate bottom line, but it also hurts patients.

Same doctor, same location but much higher prices

When a big system takes over a physician practice, they can call it a Hospital Outpatient Department (HOPD). With a simple name change, they can now tack on hospital facility fees. Even though it’s often the same service, with the same doctor, in the same place, the price can rise for everyday medical care. In some cases, that simple name change can quadruple costs.

Consider the average cost of three common procedures in 2022, from this recent BCBSA analysis:

The number of doctor’s offices that have been bought up by hospitals has skyrocketed in recent years. What’s more, prices at these HOPDs are also growing at a faster rate than those at physician practices. There’s no justification for that. Studies show when that happens quality does not improve and there is lower patient satisfaction.

The bottom line? Where you receive health care shouldn’t dictate how much it costs. No patient should pay more for the same service at the doctor’s office simply because a hospital now owns that practice. 

“Why are we placing greater financial burdens on patients at a time when many are struggling to afford health care and health care costs are a leading cause of personal bankruptcies? What’s more, we know that site differential payments are a leading reason why independent physician practices are struggling to maintain financial viability in many communities."

R. Shawn Martin, executive vice president and chief executive officer for the American Academy of Family Physicians

What we can do now

BCBSA is focused on making hospital prices fair and reasonable. We’re working to advance commonsense solutions to make care more affordable for everyone.

And Congress can help. They’ve already taken some positive steps.

The House of Representatives passed two critical provisions of the Lower Costs, More Transparency Act (HR 5378):

• Section 203 would require that hospitals charge the same prices for certain services whether performed in the hospital or in a hospital outpatient department. Lower prices mean lower costs for consumers and taxpayers.
• Section 204 would require a health care system to disclose whether a service was performed in an outpatient hospital-owned facility. It’s about transparency.

Now, they can do even more. The House and Senate can work together at the end of the year to ensure these provisions become law.

Just think: we could reinvest the resulting savings of nearly $6 billion over 10 years in our nation’s health care system and make sure care is more affordable for American families and employers.

Together, we can keep the pressure on hospitals to make pricing more reasonable.