Image by Jacqui from PixabayDuring an April 28 hearing on Capitol Hill, federal lawmakers repeatedly asked health system CEOs why procedures like colonoscopies are several times more expensive when performed at a hospital – or health system-owned outpatient facility – compared to an independent ambulatory surgery center (ASC).
In their responses, Sam Hazen of HCA Healthcare Inc. (NYSE: HCA) and CommonSpirit Health’s Wright Lassiter III conceded that there may be some merit in site-neutral payment reforms, which would equalize Medicare reimbursement rates for the same service across different sites of care. Additionally, Lassiter pointed out that his health system has already invested in lower-cost sites of care like ASCs.
About three hours into the House Ways & Means Committee meeting, Rep. Greg Steube (R-Fla.) remarked that “rapid hospital consolidation and vertical integration” in his home state have allowed health systems to buy up off-campus outpatient departments and then collect higher rates for common procedures, even when care is delivered in settings that look like independent physician offices.
“How can you justify facility fees on outpatient facilities when there is no meaningful difference in the care delivered or the quality of care?” Steube asked.
Echoing a longstanding argument held by the hospital industry, Hazen replied that “there are aspects to hospitals that reimbursement covers beyond just the procedure.” That includes “24/7, 365” care for patients, readiness for emergencies like hurricanes and uncompensated care, he said.
“I do believe there are opportunities to rationalize some of those differences,” he added.
Hazen turned to ASCs as an example.
“In the ambulatory surgery center discussion, there could be certain procedures [where] the separation between the prices are too significant, and they need to be less because they’re not emergency driven or something of that nature,” the CEO said.
Steube asked if HCA could investigate that opportunity and report back to the Ways & Means Committee within 30 to 60 days, to which Hazen replied: “We would be glad to work with the committee on that.”
Lassiter concurred with Hazen that there are good reasons “why some of the differences exist between hospital-based activities and physician-office activities.” But he also said CommonSpirit “would acknowledge there might be opportunities for modifications in the current site-neutral process.”
Further, Lassiter pointed out that of the 2,300 care sites CommonSpirit owns, only 158 are hospitals.
“So, we work very hard to operate ambulatory surgery centers that would not have that site-neutral adjustment,” he said. “Frankly, we open more ambulatory, non-site-neutral facilities every year than we … acquire new hospitals. So we’re very focused on having multiple care sites to ensure that patients in the community have access to affordable services.”
Rep. David Kustoff (R-Tenn.) took a position similar to Steube’s – with the help of a visual aid that demonstrated how a physician-owned surgery center bills Medicare $656 for a colonoscopy while a hospital charges $1,222.
“I think there’s absolutely opportunities, as we look at site neutrality, to look where things aren’t reasonable,” NewYork-Presbyterian CEO Brain Donley said.
But he said that as policymakers look at options for site neutrality, they should remember that hospitals tend to take care of sicker patients. In short, he said, they cannot turn patients away, and they face higher regulatory burdens than physician-owned facilities.
‘We care for more complex patients’
ECU Health’s Micahel Waldrum was less willing than his colleagues to cede any ground on the site-neutrality subject.
“As you know, we have a federal mandate to care for anyone who shows up at the hospital. … We’re the only participants in the healthcare value chain that have that obligation,” Waldrum said, addressing Steube.
Hospital outpatient departments – which health systems have faced criticism for buying up so they can charge higher rates for procedures – help rural health systems recruit physicians and support the workforce to maintain critical access to care, Waldrum added.
Steube shot back at that: “You’re saying, because of that requirement, it is going to cost you more to provide the exact same service as it would, say, at an ASC?”
“We do not provide the exact same service – we care for more complex patients,” Waldrum said. He added that ECU Health “would like to work on some rational reworking” of site-neutral payments, but asserted that “these payments are essential in providing access to care for rural Americans.”
Waldrum also contended that people in sparsely populated regions “have no alternative access points” for outpatient procedures.
“No one is coming to rural America to set up those practices,” he said.
ECU Health is based in Greenville, North Carolina.
Those exchanges between health system CEOs and lawmakers come on the heels of a newly updated analysis that found ASCs generated $27.9 billion in savings for Medicare fee-for-service between 2019 and 2024. Savings per year from procedures being performed at ASCs rather than HOPDs grew from $4.5 billion in 2019 to $5.1 billion in 2024.
The Ambulatory Surgery Center Association (ASCA) has previously taken a nuanced position on site neutrality.
Speaking at the trade group’s annual conference in 2025, ASCA CEO Bill Prentice warned that ASCs might not be able to absorb the volume shift of outpatient procedures if hospitals’ reimbursement for such services gets cut.
He also noted that ASCs could be hurt if site-neutrality policies tip the scales in favor of physician offices rather than surgery centers for certain procedures.
