Health system CEOs faced an airing of grievances Tuesday from House Ways and Means Committee members over rising healthcare costs and policies several Republican members said have placed their organizations on an uneven competitive playing field.
The more than four-hour hearing was in many ways a rehash of the session held by a separate House subcommittee last month, in which the majority party’s members questioned whether hospitals could justify various subsidies and pay rates while Democrats focused their commentary on repeals of funding and coverage reductions from last summer’s One Big Beautiful Bill Act.
One difference between the sessions was who was called to testify, with this week’s session featuring the CEOs for HCA Healthcare, the country’s largest for-profit system, and nonprofits CommonSpirit Health, NewYork-Presbyterian and ECU Health as opposed to the heads of provider lobbying associations.
The other difference: the CEOs suggested they were willing to give some ground on Medicare’s site-neutral payment policy, in which hospital-affiliated care sites receive higher rates than other locations like ambulatory surgery centers for a specific service.
A shift from site neutrality has been broadly opposed by the hospital industry, which is quick to highlight their broader range of available services, administrative burdens and emergency care requirements when justifying the differences. The pushback on calls for such changes—which have been floated in some capacity by congressional policy advisors and every administration since Obama’s—has frustrated several lawmakers who said the higher prices are contributing to hospitals’ leading share of healthcare spending growth.
“Every time we try to advance these so-called site-neutral policies, big hospitals, they fight us. They fight us tooth and nail,” Ways and Means Chairman Jason Smith, R-Mo., said during his opening comments.
Rep. Jodey Arrington, R-Texas, described site neutrality reform as an “opportunity to do something that both sides have said is important, is commonsense, straightforward, save[s] the system money.” He asked the testifying health system CEOs to raise their hand if they agreed with that characterization and believed it should be implemented.
After none of the executives raised their hand in support, HCA Healthcare CEO Sam Hazen responded that “there are certain aspects of your discussion here that have merit. I think there’s also merit to the hospitals receiving a premium in certain circumstances. We’d be more than willing to work with you on that.”
“I think that’s fair,” Arrington replied, “and I want to be sensitive to those nuances so we don’t hurt you while helping the system. So let’s work together and get this done.”
Site neutrality, and other related topics like a ban on new physician-owned hospitals, was repeatedly highlighted by lawmakers during their rounds of questioning. They brought a slew of examples and hypotheticals in which the bills paid at a hospital site far outweighed those of other facilities—for instance, a Medicare facility fee of $656 for a colonoscopy at an ASC versus a $1,222 fee at a hospital.
Though the executives remained guarded and continued to highlight their elevated expenses, they also began to follow Hazen’s lead in seeking a middle ground.
“I’ll concede that there are some services that you provide that the surgery center doesn’t provide outside of the colonoscopy, but is [a nearly] 100% increase in the fee that you charge versus the surgical center, does that seem reasonable to you, to the American taxpayer?” asked Rep. David Kustoff, R-Tenn., at the top of one such exchange.
“I think there [are] absolutely opportunities, as we look at site neutrality, to look where things aren’t reasonable,” said NewYork-Presbyterian President and CEO Brain Donley, M.D., while urging policymakers to “remember” hospitals' higher costs when crafting any changes.
Later, in response to a different lawmaker’s request on any specific changes, Hazen said that “there could be certain procedures [performed at ASCs where] the separation of the two prices are significant, and they need to be less because they’re not emergency driven, or something of that nature."
Wright Lassiter III, president and CEO of CommonSpirit Health, agreed “there might be opportunities for modifications to the current site-neutral process” and noted that his large organization of 2,300 care sites has been focused on having multiple types of care locations available and “frankly, open more ambulatory non-site-neutral facilities every year than we acquire new hospitals.”
Michael Waldrum, M.D., CEO of ECU Health in rural North Carolina, said the higher payments for hospital outpatient departments are what allow the safety-net system to be able to recruit physicians and continue to operate.
“We do not provide the exact same service [as an ASC]. We care for more complex patients and [we’re] the only service,” he said. “…We’re willing to look at it. We would like to work on some rational reworking of how that works, but these payments are essential to providing access to care for rural Americans.”
Each of the CEOs later attested that each of their organizations have never sought to acquire an independent care site with the explicit goal of converting it to a hospital-affiliated location for greater reimbursement.
Congressional action aside, the Centers for Medicare and Medicaid Services (CMS) has already started the ball rolling toward site-neutral payment policy.
A rule finalized in November applies the rates for physicians to any codes assigned to the drug administration ambulatory payment classification when the services are provided at an off-campus facility. CMS estimated that these changes will reduce spending by $290 million in 2026, including $220 million in savings for Medicare and $70 million felt by beneficiaries through reduced coinsurance.
Price frustrations fuel plenty of finger pointing
While the Ways and Means Committee’s members dug deepest into site-neutrality issues, other topics were largely relegated to diatribes from lawmakers with limited meaningful feedback from the witnesses.
The committee’s chair set the tone early, citing an oft-echoed statistic in which hospital prices rose about 300% since 2000, outpacing all other areas of the economy.
“Hospitals with more than 100 beds have a higher profit margin than Delta Airlines, Disney and Target,” Smith said. “Turns out charging an arm and a leg for healthcare is more lucrative than the Happiest Place on Earth.”
Smith and other members from both parties noted that health insurance CEOs, in a January hearing, were quick to highlight hospitals’ fees and prices as a driving force behind their own rising coverage premiums. The lawmakers often stressed their belief that insurers and other actors within healthcare hold a fair share of the blame, but that it was time to begin holding hospitals accountable as well.
The health system CEOs, broadly, said the skyrocketing hospital spending is due to a rise of sicker and sicker patients that require more complex care, increasing demand for care services and their inability to turn patients away. Some Republicans flatly told executives they were unsatisfied with the explanation.
“Let’s be clear and accurate: Medicare already adjusts payments based on how sick a patient is, whether they are sick in a hospital or a doctor’s office, so that argument does not hold any water,” Rep. Nathaniel Moran, R-Texas, said.
Others raised concerns that large urban health systems were gaming systems in place to support rural hospitals, such as the 340B program and Medicare designations tied to supplemental payments.
Donley faced the brunt of these inquiries, to which he specified that New York-Presbyterian’s major urban hospitals are designated as rural referral centers and as such support other geographically rural facilities by taking on their patients. On 340B, he said NewYork-Presbyterian believes it uses the savings to take care of patients “as designed,” while Waldrum added that the drug subsidy program’s discounts are essential for safety-net facilities and borne by drugmakers, not the public.
Democrats, by and large, kept their direct criticisms of hospitals’ prices and practices to a minimum. Rather, they sparred with their counterparts over reductions in coverage and upcoming cuts to hospital Medicaid funding that they said—with some agreement from the CEOs—would reduce access through site closures and are contributing to higher payments for consumers.
“They keep trying to convince people that it’s about just the providers,” Ranking Member Richard Neal, D-Mass., said during his opening comments. “It’s about many of their policies as well. Families are paying more for everything because they have decided to go along with these ill-considered proposals. … We should have a conversation about the tax bill, and then we can get on to some of the questions that, perhaps, are legitimately proposed to you this morning.”
Rep. Lloyd Doggett, D-Texas, responded to calls from Smith for an end to finger pointing (from lawmakers and industry alike) by accusing the chair of obstructing and blocking legislation “that could make a real difference.”
“This is more a deflection hearing than a hospital hearing,” he said, later calling for the committee to tackle issues of insurance coverage, pharmaceutical prices and prompt reimbursement from Medicare Advantage plans.
Doggett criticized the majority party’s legislative focus to-date: price transparency, he said, “is unlikely to have a significant impact on desperate, sick people seeking care,” whereas changes to site neutrality “may have some merit, [but is] a fairly narrow focus.”
The health system CEOs also came to the table with their own suggestions for policies that could reduce hospital costs.
Reductions in administrative and regulatory burdens were a common refrain, particularly surrounding areas like prior authorization or Medicare quality reporting. Lassiter pointed to difficulties securing reimbursement from Medicare Advantage plans, as well as the non-uniform filing requirements for different carriers, while Hazen called for increasing hospital competition by limiting Certificate of Need laws implemented in some states. Each executive advocated for policies that increase insurance coverage, often to the agreement of Democrats.
In defending their business practices, the health system executives highlighted millions to billions of community benefit their organizations had delivered and reaffirmed the need to cost-shift higher prices for commercial plans in order to offset their losses from Medicare and Medicaid. Both arguments landed with mixed receptions among Republicans, who have been increasingly calling for increased community benefits standards and transparency for nonprofits, and questioned the role supplemental payments and accounting practices have on reported government coverages.
On provider consolidation, another frequent topic of discussion, ECU Health’s Waldrum said that rural facilities in particular are being driven into affiliations as a survival mechanism, and supporting those hospitals fuels the higher prices charged at its urban academic facility.
“Consolidation in our market is not driven by preference, it is how we survive,” he said. “As some exit and others enter with profit-driven agendas, systems like ECU Health are left to serve as a safety-net. The result is reduced access, worsening outcomes and increasing costs.”
Hospital CEOs’ time in the hot seat was warmly received by insurers and pharmaceutical groups watching on the sidelines. In statements released ahead of Tuesday’s hearing, AHIP, the Purchaser Business Group on Health, PhRMA and others critical of the hospital sector cheered on the additional scrutiny.
“Hospital costs account for more than 40 cents of every premium dollar—more than any other category—and many hospital systems continue to raise their prices at rates that dwarf inflation while also sticking patients with high bills with layers of opaque fees,” AHIP spokesperson Chris Bond said in one of those statements. “Instead of blaming others, the hospital industry should stop their anticompetitive consolidation, opaque billing practices and unaffordable price hikes that continue to drive Americans’ premium costs higher.”