The Great Healthcare Grift:
How Medicare Overpays Health Systems and Wastes Billions of Your Tax Dollars.
Government efficiency. It’s s a phrase that lands somewhere between jumbo shrimp and honest politician on the list of oxymorons. But nowhere is bureaucratic incompetence more glaring than in Medicare’s hospital outpatient reimbursement scheme.
While independent Ambulatory Surgical Centers (ASCs) deliver high-quality care at a fraction of the price, the government insists on overpaying hospitals through bloated Hospital Outpatient Department (HOPD) fees, effectively lighting $16 billion of taxpayer money on fire every year (that would buy me a lot of cigars).
Why? Because hospitals have lobbyists.
Let’s break it down.
Same Surgery, Same Surgeon, But Medicare Pays 2x More for No Reason
The government claims to care about efficiency. Yet Medicare pays significantly more when a procedure is performed in a hospital-owned outpatient department instead of an ASC even though the care is the same, the outcomes are the same, and the only difference is who profits.
Here are five of the most commonly performed procedures in the U.S. and the absurd price differences between sites of service:
1. Cataract Surgery (CPT 66984)
HOPD Facility Fee: $3,235
ASC Facility Fee: $1,917
Overpayment Per Surgery: $1,318
Annual Medicare Overpayment: $5.27 billion
Cataract surgery is the single most common outpatient procedure in the U.S., with over 4 million performed annually. Medicare could save over $5 billion per year simply by applying the ASC rate to all cataract surgeries.
2. Colonoscopy with Biopsy (CPT 45380)
HOPD Facility Fee: $1,607
ASC Facility Fee: $930
Overpayment Per Procedure: $677
Annual Medicare Overpayment: $4.47 billion
Colonoscopies are routine. They do not require hospital-level care. Yet the government shovels nearly $4.5 billion in unnecessary payments to health systems every year.
3. Arthroscopic Knee Surgery (CPT 29881)
HOPD Facility Fee: $4,243
ASC Facility Fee: $2,350
Overpayment Per Surgery: $1,893
Annual Medicare Overpayment: $1.86 billion
A straightforward knee scope costs nearly twice as much in an HOPD for no reason. If Medicare stopped subsidizing health system bloat, the US would reduce the federal deficit by nearly $2 billion per year without cutting a single procedure.
4. Upper Gastrointestinal Endoscopy with Biopsy (CPT 43239)
HOPD Facility Fee: $1,350
ASC Facility Fee: $1,000
Overpayment Per Procedure: $350
Annual Medicare Overpayment: $2.14 billion
Routine GI procedures are another cash cow for hospitals. Every time Medicare reimburses an HOPD instead of an ASC, an extra $350 gets wasted adding up to $2.14 billion annually.
5. Hernia Repair Surgery (CPT 49505)
HOPD Facility Fee: $4,819
ASC Facility Fee: $2,595
Overpayment Per Surgery: $2,224
Annual Medicare Overpayment: $2.22 billion
This one is egregious. Hernia repairs do not require a hospital setting. A single rule change could save taxpayers over $2 billion per year while maintaining the same level of care.
Total Annual Savings if Medicare Stopped Overpaying Health systems: $15.96 Billion
That’s nearly $160 billion over a decade, money that could reduce premiums, improve physician reimbursements, or simply stay in taxpayers pockets.
Instead, it is funneled into health systems that already report billions in net profit, pay their CEOs seven-figure salaries, and claim nonprofit status to dodge taxes.
And the worst part? The federal government knows this.
Why Wont Medicare Fix This? Follow the Money.
Health systems are some of the largest political donors and lobbyists in Washington. They fight for anti-competitive rules that funnel more dollars into their bottom lines.
The American Hospital Association (AHA) spent nearly $27 million on lobbying in 2023 alone. Meanwhile, independent physicians and ASCs that provide efficient, affordable care get drowned out in the noise.
The result? Medicare overpayments persist, and the American taxpayer foots the bill.
The Solution: Site-Neutral Payments NOW
Medicare needs site-neutral payments where the same procedure costs the same amount no matter where it is performed.
This is not a radical idea. It is common sense.
Same service, same reimbursement.
No more bloated hospital payments.
No more taxpayer subsidies for inefficiency.
The only ones who lose are hospital executives and their lobbyists. Everyone else wins including patients, taxpayers, employers, and physicians
It is Time to End the Medicare Grift
Every year that Congress stalls on site-neutral payments, $16 billion vanishes into health system coffers that must go toward patient care, not bureaucracy.
This is not a partisan issue. This is not a healthcare quality issue. This is pure, unfiltered waste.
If Washington wants to prove it cares about healthcare costs, this is where it starts.
End the handouts. End the inefficiency. Pass site-neutral payments now.
What can you do today?
Contact your representative in Congress.
Contact Ways & Means. They have oversight on CMS (Medicare).
Support Physician Led Healthcare for America at PhysicianLed.com
-Rojas out