Paragon Urges Hospital Payment Reform
The influential Paragon Institute, which influenced the One Big Beautiful Bill Act (OBBBA) and no extension of Exchange enhanced subsidies, has issued a new report challenging hospitals’ views on their finances and advocating payment reform.
About one third of over $5 trillion each year is spent on hospital care and Paragon notes that hospitals are a key factor in driving premiums given major cost hikes annually. It notes that since 2000 hospital prices have risen three times faster than inflation and double wage growth. It says government policies inflate and distort hospital prices as well as encourage consolidations and physician acquisition. It argues hospitals can make money at Medicare rates and hospitals have had strong positive margins. It calls attention to the success of some hospitals with large government program patient loads.
Paragon proposes a number of reforms below. Hospital groups took issue with the financial characterizations as well as proposals. But reform appears to be fermenting in Congress.
The proposed reforms include:
- Site-neutral payments in Medicare
- Medicare rate setting based on Medicare Advantage price transparency data
- Further Medicaid provider tax and state-directed payment restrictions
- Oversight of hospital supplemental payments
- Development of a comprehensive inventory of federal hospital payments
- Better targeting of 340B net savings to in-need entities or individual patients directly
- Repeal of state’s certificate of need laws
- Repeal of restriction on reimbursement to new physician-owned hospitals
- Increased oversight of hospitals’ compliance with tax rules
- Increased enforcement of hospital and insurer price transparency
- Removal of uncompensated care payments from Medicare and moving to targeted payments based on share of charity care and non-Medicare bad debt
- Elimination of the current graduate medical education (GME) funding formula in favor of discretionary grants
Additional article: https://paragoninstitute.org/private-health/the-hospital-cost-crisis-how-government-policies-drive-consolidation-undermine-competition-and-fuel-soaring-prices/?nab=0
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