Dear Elon, Incorporate Medicare's "Site-Neutrality" into Dogecoin's Priorities
Elon Musk and Vivek Ramaswamy have announced their intention to take on government waste, aiming to tackle the issue through the newly established Department of Government Efficiency, or DOGE. Their plan involves cutting unnecessary spending and dismantling bureaucratic barriers that prevent Americans from benefiting from trillions in economic growth.
One of the first areas to examine would be the irrational regulations that enable hospitals to inflate Medicare bills by billions annually.
As per the present legislation, Medicare grants substantially higher remunerations to hospitals' affiliated outpatient clinics and doctors' offices compared to independently operated facilities, for identical medical tests, treatments, and procedures.
Initially, the higher remunerations were meant to compensate for the extraordinary administrative burdens and expenses associated with managing a large-scale hospital complex. This rationale is reasonable for medical procedures conducted within an actual hospital, it's only fair to pay more for, say, an X-ray administered in an emergency room than in a doctor's office.
However, hospital administrators have discovered they can manipulate the system. They extended this preferential billing privilege to smaller, off-campus facilities known as "hospital outpatient departments" (HOPDs), situated miles away from a hospital.
Under the existing Medicare payment guidelines, hospitals are not only encouraged to establish new outpatient centers but also to assimilate independent practices that already exist. Hospitals can acquire a local clinic in the morning, and by nightfall, they can start billing Medicare up to 50% more for the same services.
This misaligned incentive mechanism has fueled consolidation across the healthcare sector and imposed substantial financial burdens on patients and taxpayers. Research indicates that when physician practices are absorbed by hospitals, their prices escalate by over 14%. This vertical integration also reduces competition in the market, allowing hospitals to dictate prices with impunity.
Vertical integration also enables hospitals to expand their misuse of the 340B program, which grants hospitals and outpatient clinics discounts on prescription drugs while enabling them to charge Medicare the original price of the drugs. Initially, humanitarian intentions guided the creation of the 340B program to assist low-income patients; however, hospitals often misuse the savings. As hospitals incorporate more physician practices into HOPDs, they become eligible to amass increased profits from 340B, with no obligation to utilize the funds for charity care.
Despite the substantial profits earned by hospitals through vertical integration, patients do not experience any benefits. According to a study by Harvard, hospital performance and patient satisfaction rates deteriorate following hospital mergers.
The remedy to these issues is "site-neutrality"—reimbursing all healthcare providers uniformly, regardless of who owns the facility. The implementation of this policy would discourage vertical integration by eliminating incentives for hospitals to acquire physician practices. Furthermore, it would result in substantial budget savings.
According to the Congressional Budget Office, the government could save $100 billion over the next decade if HOPDs were reimbursed at the same rate as independent physicians. By 2030, site-neutrality could eliminate up to $672 billion in total national healthcare expenditures while reducing the federal budget deficit by a quarter of a trillion dollars, as per the Committee for a Responsible Federal Budget.
Some legislators are advocating for site-neutrality. The proposed Lower Costs, More Transparency Act (H.R. 5378) would apply site-neutrality to hospital-owned physician offices, saving nearly $4 billion in taxpayer funds, as per CBO estimates.
Leveling Medicare's reimbursement structure would annual savings in billions for taxpayers—and boost competition among healthcare providers, leading to an array of choices and lower costs for patients and taxpayers.
Elon Musk and Vivek Ramaswamy's new department, DOGE, aims to tackle government waste by examining irrational regulations that allow hospitals to inflate Medicare bills. Under current Medicare guidelines, hospitals receive higher remunerations for procedures in affiliated outpatient clinics and doctors' offices compared to independent facilities, which hospitals have exploited by establishing off-campus facilities and acquiring local clinics, subsequently billing Medicare up to 50% more.
This misalignment in incentives has fueled consolidation in the healthcare sector, imposing financial burdens on patients and taxpayers. Hospitals' vertical integration also allows them to expand their misuse of the 340B program, which grants discounts on prescription drugs while enabling them to charge Medicare the original price.
The Congressional Budget Office estimates that site-neutrality, or reimbursing all healthcare providers uniformly, could save the government $100 billion over the next decade and eliminate up to $672 billion in total national healthcare expenditures by 2030. Advocates for site-neutrality propose the Lower Costs, More Transparency Act (H.R. 5378) to save taxpayer funds by applying site-neutrality to hospital-owned physician offices.
Elon Musk and Vivek Ramaswamy's efforts to tackle government waste, combined with legislative action promoting site-neutrality, could potentially save billions for taxpayers and lower healthcare costs for patients.
