House Ways and Means grills hospital CEOs on soaring prices, rural access and site-neutral payments

House Ways and Means Committee Chairman Smith opened a May 13 hearing by sharply criticizing hospital consolidation and high prices, saying hospitals with more than 100 beds now have higher profit margins than major U.S. companies and charging that market concentration and loopholes have left patients and taxpayers paying too much.

The hearing drew testimony from five senior health system leaders who gave differing explanations for rising hospital prices and recommended a mix of policy responses. Sam Hazen, chief executive officer of HCA Healthcare, said HCA provided about "$4.5 billion in uncompensated care" last year and urged stable, affordable coverage, fair competition and cuts to administrative friction such as excessive prior authorization. Wright Lacader, president and CEO of CommonSpirit Health, described his system’s community-benefit work and told the panel that CommonSpirit faces large unpaid Medicare Advantage claims and nearly $4.3 billion in outstanding MA payments. Brian Donnelly, president and CEO of NewYork–Presbyterian, cited $2.4 billion in community benefit and emphasized shifting care to lower‑cost settings where clinically appropriate. Mike Waldrum, chief executive of ECU Health, framed the problem in rural terms, saying consolidation is often the only way to sustain essential local services. Brad Woodhouse of Protect Our Care faulted recent federal cuts (HR1) and presented a nonprofit tracker of hospitals at risk.

Why it matters: Members pressed witnesses on several concrete, policy‑relevant questions that could lead to legislation. Representatives from both parties singled out three levers: (1) changing payment policies that let hospital‑owned outpatient sites bill far more than the same service in a physician’s office (site‑neutral payment), (2) stricter oversight of tax‑exempt hospitals and programs such as the 340B drug discount program and (3) reforms to Medicare Advantage payment and prompt pay rules to address large unpaid claim backlogs.

Key takeaways

- Coverage and uncompensated care: CEOs said more stable coverage reduces system costs by avoiding late, costly emergency care; witnesses reported large uncompensated care and shortfalls when payers underpay (HCA cited about $4.5 billion in uncompensated care; CommonSpirit described billions in unpaid MA claims).

- Site‑of‑service price gaps: Members repeatedly pressed why identical outpatient procedures cost considerably more when performed in hospital-owned sites versus independent physician offices. Witnesses acknowledged some price gaps and stressed the need to account for 24/7 readiness, emergency capacity and regulatory overhead—but several members pushed for site‑neutral payments to curb incentives to buy physician practices simply to bill higher facility fees.

- Rural access and program design: Rural witnesses and members warned that some payment rules and federal cuts threaten rural hospitals’ viability. Members pressed witnesses about CMS rural reclassifications for large urban systems and whether CMS rules require change; NewYork–Presbyterian said its CMS designation as a rural referral center reflects referral patterns and resident training that serve rural communities.

- Medicare Advantage, MA denials and prompt payment: Multiple witnesses described operational costs and underpayments from Medicare Advantage plans. Members and witnesses supported bipartisan 'prompt and fair pay' proposals to speed payment and reduce long overdues.

- Administrative burden and prior authorization: Hospital leaders described major administrative costs tied to overlapping regulations and payer processes, such as prior authorization and denials; some criticized new algorithmic claim‑denial models as having misaligned incentives.

Representative exchanges and disputes

- HR1 and closures: Protect Our Care asserted that the recent tax/health bill drove closures and increased risk; CommonSpirit and others said closures often stem from low patient volume, workforce shortages, or other local factors—members asked for clearer causal evidence before attributing specific closures to one federal bill.

- Rural reclassification: Members pressed NewYork–Presbyterian on CMS rural referral‑center designations for hospitals in New York City. The hospital said its referrals and training mission justify the designation under current CMS rules; several lawmakers said the rules merit review to protect funds intended for truly rural facilities.

- Public benefit and tax exemption: Members asked systems how their reported community benefit compares with the tax value of exemption and sought more granular facility‑level reporting; witnesses said community benefits include Medicaid shortfalls, charity care and community programs but acknowledged differences across systems.

What happens next

Lawmakers left the hearing with several clear threads they intend to pursue: site‑neutral payment reforms or targeted adjustments to reduce facility‑fee gaps; oversight of 340B and tax‑exempt reporting at facility level; legislation to ensure timely payment for Medicare Advantage claims; and additional scrutiny on whether federal rules that allow urban systems to claim rural designations require change. Several members signaled interest in drafting or advancing bills on site neutrality and MA prompt pay.

Representative quotes

- Chairman Smith: "Hospitals with more than 100 beds have a higher profit margin than Delta Airlines, Disney, and Target."
- Sam Hazen (HCA): "Last year alone, we provided approximately $4.5 billion in uncompensated care."
- Wright Lacader (CommonSpirit): "We have $4.3 billion in unpaid Medicare Advantage claims."

Ending note: The hearing underscored broad bipartisan urgency about affordability and access, but also revealed deep disagreements about immediate causes and remedies. Committee members repeatedly pressed for concrete, implementable fixes—especially around site‑neutral payments, MA payment timeliness, and rural funding rules—that could advance in upcoming legislative work.