The $30 Billion Medicare Scam:
Why Site-Neutral Payments Must Happen Now
Medicare’s Reimbursement System is Rigged—And Employers, Patients, and Taxpayers Are Paying the Price
Medicare pays vastly different rates for the same procedures based solely on who owns the facility. For instance, a knee replacement at a Hospital Owned Outpatient Department (HOPD) is reimbursed at a higher rate than the exact same surgery at an Ambulatory Surgery Center (ASC). This discrepancy leads to significant overpayments—not because of differences in quality, safety, or patient outcomes, but because of ownership.
Multiply this across numerous procedures annually, and we’re looking at over $30 billion in unnecessary overpayments each year.
Health Systems Don’t Like Competition—So They Lobbied for This System
Health systems have built mini-monopolies through HOPDs, leveraging Medicare’s distorted pricing model to inflate costs. Instead of competing, they lobby Congress to maintain a system that favors them at the expense of patients and taxpayers. It’s not about better care—it’s about controlling the market and keeping prices high.
Physicians Are Being Squeezed—Paid Less Over Time, Regardless of Setting
While health systems benefit from inflated reimbursements, physicians are facing declining payments. Adjusted for inflation, Medicare physician payment has declined 33% from 2001 to 2025. This downward trend affects physicians across all settings, as their professional fees remain consistent whether they perform procedures in an ASC or an HOPD. The disparity in facility reimbursements does not translate to higher physician earnings; instead, it funnels more money to health systems while physicians’ compensation continues to erode.
Employers Are Paying for This Too
Medicare sets the stage for commercial insurers. When Medicare over-reimburses HOPDs, private insurance follows the inflated rates. Employers end up paying higher health plan costs because insurers benchmark rates against Medicare’s flawed payment structure.
For example, a hernia repair at an ASC costs significantly less than at an HOPD. Employers are forced to absorb these inflated costs. The trickle-down effect? Higher premiums, more out-of-pocket expenses, and lower wage growth as businesses struggle to cover rising healthcare costs.
The Solution: Site-Neutral Payments
Site-neutral payment reform means the same procedure gets reimbursed at the same rate, no matter where it’s done. This simple fix would:
• Eliminate $30 billion in annual waste
• Lower employer healthcare costs
• Reduce Medicare’s financial burden
• Encourage competition instead of monopolization
This isn’t a complicated policy shift—it’s common sense. The only ones benefiting from the status quo are health systems that exploit the reimbursement gap.
Congress Must Act Now
Medicare’s reimbursement model is anti-competitive, inflationary, and unsustainable. If Congress is serious about lowering healthcare costs, site-neutral payments must be implemented now.
Employers, physicians, and taxpayers must demand change. Contact your lawmakers. Share this article. Let’s fix this system before another $30 billion is wasted.
-Rojas out
Sources:
• Reducing Medicare Costs - Ambulatory Surgery Center Association
• 2025 Medicare Updates Compared to Inflation Chart - AMA
• Medicare Physician Pay Has Plummeted Since 2001 - AMA
• Ambulatory Surgery Centers Versus Hospital-based Outpatient Departments - AAOS
• Payments for Outpatient Joint Replacement Surgery - PubMed Central