Members of the House Ways and Means Committee discussed the drivers of rising medical bills Tuesday, hearing testimony from four hospital CEOs that highlighted consolidation in local hospital markets, differences in charges based on where care is delivered, and administrative requirements that can slow care and increase overhead.
Witnesses included executives from HCA Healthcare, the largest for-profit health care system in the United States; CommonSpirit Health, the largest Catholic health system in the country; NewYork-Presbyterian, one of the nation’s most comprehensive, integrated academic health care system; and ECU Health, a not-for-profit system serving eastern North Carolina/
The hearing is the second in a series of rising health care costs. In January, five executives from the country's biggest health insurers appeared before the House Ways and Means Committee and suggested ways to improve affordability, expand access, and simplify the patient experience.
During Tuesday’s questioning, Republicans focused on hospitals’ role in escalating costs, while Democrats emphasized potential effects of coverage losses and reductions in public programs on patients and community providers. The four-and-a-half hour hearing included sharp partisan moments, but lawmakers and hospital executives also identified several areas of overlap: patients can face higher costs for the same service after a hospital acquires a clinic; prior-authorization requirements can take significant staff time; and chronic disease and workforce shortages are contributing to higher-acuity care in many systems.
Consolidation and market power in hospital markets
Rep. Jason Smith, R-Mo., blamed decades of hospital mergers for giving large systems pricing power, arguing that communities with fewer competing hospitals are vulnerable to sharply higher bills. He cited examples raised during the hearing of large price swings for similar services depending on where patients receive care.
Hospital executives pushed back that comparisons can miss underlying differences in patient severity and the costs of running 24/7 facilities. Several pointed to rising labor, supply, and drug costs, and said Medicare and Medicaid payments often fall short of the cost of care—pressures they said are particularly acute for rural providers.
Site-neutral payments: Same service, different price
A central theme was the gap between what Medicare and commercial insurers pay for services delivered in a hospital outpatient department versus an independent physician office or ambulatory surgery center. Republicans said that the differential encourages systems to buy up practices and add facility fees, driving higher coinsurance for seniors and higher premiums for employers. even when patients see the same clinician in the same building.
The hospital industry has long objected to site-neutral payments that would ensure the cost for a service provided in a hospital setting is the same as if it was provided in a physician office or ambulatory center. Execs at the hearing generally avoided endorsing broad site-neutral legislation. They argued hospitals incur added costs that stand-alone clinics do not, including emergency readiness, higher regulatory requirements. and caring for uninsured patients. However, HCA Healthcare’s Sam N. Hazen said he is willing to work with Congress on narrower changes.
Administrative burden: Prior authorization, denials, and billing complexity
Members of both parties highlighted what they described as “payment friction” between providers and insurers. CommonSpirit President CEO Wright Lassiter III said his system had billions of dollars in unpaid claims and that it costs substantially more to process Medicare Advantage claims than traditional Medicare, citing repeated requests for documentation, denials, and delayed approvals that can keep clinicians tied up in paperwork.
Democrats also focused on prior authorization, pointing to analyses showing many denials are overturned on appeal, and questioned Medicare’s pilot program that uses AI to process prior authorization. Lawmakers have received complaints that the model has led to longer delays, higher costs, and care denials. Lassiter said it was early to judge the model but warned that contractors paid based on “savings” could create incentives to reject appropriate care.
Drug prices and 340B: Discounts, oversight, and where savings go
Pharmaceutical costs came up repeatedly, including testimony that hospital drug spending has risen sharply in recent years. Republicans accused some systems of exploiting the federal 340B program, which requires drugmakers to provide discounts to hospitals serving low-income patients. ECU Health CEO Michael Waldrum, M.D., and NewYork-Presbyterian President and CEO Brian G. Donley, M.D., argued the savings help finance safety-net care and community programs and cautioned against adding reporting requirements that would increase administrative costs.
Coverage stability, cost-shifting, and the rural access squeeze
Ranking member Richard Neal, D-Mass., and other Democrats argued that when patients lose coverage, they delay care and eventually arrive in emergency rooms sicker and unable to pay, raising uncompensated care and pushing costs onto insured families. Hospital leaders largely agreed on the core point that stable coverage can reduce avoidable crises, even as lawmakers fought over the causes and scale of recent coverage changes.
Waldrum described a “hub-and-spoke” model in eastern North Carolina in which profitable service lines at a larger medical center help subsidize small community hospitals, including maternity units that may deliver only a handful of babies a day. He warned that closing those units can worsen maternal and infant outcomes but said keeping them open requires workforce support and payment policies that reflect rural realities.
Workforce shortages and chronic disease: Longer-term cost pressures
Several members raised concerns about projected shortages of doctors and nurses and urged expanding graduate medical education slots, with an emphasis on rural training. Executives said workforce constraints raise costs directly through labor markets and indirectly by limiting access to earlier, lower-cost care, a dynamic that can push patients toward emergency departments and inpatient beds.
Lawmakers from both parties also expressed concern with the nation’s health, pointing to obesity, diabetes, and other chronic conditions that increase the complexity of hospital care. The CEOs said they endorsed prevention efforts, including nutrition programs and community partnerships, and several members highlighted gaps in behavioral health coverage that can leave patients boarding in emergency rooms.
Potential policy ideas
Among the options discussed:
- Narrowing the payment gap between hospital-owned outpatient departments and independent clinics; tightening rules around “rural” classifications and other payment add-ons; and boosting competition through antitrust enforcement and changes to state Certificate of Need laws that some executives said restrict supply.\
- Setting clearer timelines and standards for prior authorization, enforcing faster payment of clean claims in Medicare Advantage, reducing duplicative federal quality-reporting requirements, and improving digital data exchange between insurers and providers so claims and clinical documentation do not require repeated manual work.
- Taking steps aimed at drug spending, including more scrutiny of manufacturer pricing and questions about whether 340B discounts are being used to lower costs for patients. Hospital leaders urged lawmakers to preserve the program’s role in supporting safety-net care while acknowledging that clearer guardrails could help answer critics and reduce litigation.
The committee is expected to continue its series of affordability hearings, with lawmakers signaling interest in follow-up legislation on site-of-care billing, insurer-provider disputes, and rural payment rules.