Healthcare costs have hit record highs over the last decade, driven largely by the expansion of large, vertically integrated health systems and the increasing cost of hospital operations.
In an April report the Paragon Health Institute offers 12 potential policy reforms that could cut down on hospitals’ cost issues.
Here are five of those policies that are most relevant to physicians and ASCs:
1. Site neutral payments: Site neutrality policies have been a closely watched area of reform for years, with CMS making incremental moves towards narrowing the gap between ASC and HOPD reimbursement rates. The 2026 Hospital Outpatient Prospective Payment System rule advanced a major step toward site-neutral payment. Hospitals currently receive about 60% higher Medicare payments for similar services due to facility-fee differences — a structure lawmakers say incentivizes hospital acquisition of physician practice. New site-neutrality reforms are expected to lower hospital payments, rather than boost ASC payments to HOPD levels.
“If reimbursement suddenly shifted to site-neutral payments, private practices would immediately redirect as many appropriate cases as possible from hospitals to their own ASCs, since the financial disadvantage of performing cases outside the hospital would disappear overnight,” Brian Curtin, MD, an orthopedic surgeon at OrthoCarolina Hip and Knee Center in Charlotte told Becker’s.
The paper’s recommendations include enacting site-neutral payment reform in both Medicare and Medicaid in an effort to broadly disincentivize hospitals from acquiring physician practices.
2. Repeal the physician-owned hospital ban: The paper recommends that Congress repeal Medicare payment limitations that have frozen POH growth since 2010 as a part of the Affordable Care Act.
CMS’ new Transforming Episode Accountability Model is the most significant mandatory bundled payment program in recent history, affecting nearly 750 hospitals across 188 geographic markets.
The model aims to “incentivize care coordination, improve patient care transitions and decrease the risk of avoidable readmission,” according to CMS. Now, the agency is signaling it might want physician-owned hospitals at the table. In its proposed 2027 Hospital Inpatient Prospective Payment Systems rule for Acute Care Hospitals, CMS included a request for information specifically about physician-owned hospital participation in TEAM. Public comments are due June 9.
Some pending legislating — most notably HR 2191, the Physician Led and Rural Access to Quality Care Act — would permit physicians to own rural hospitals as long as the facility is more than a 35-mile drive from a main patient campus or critical access hospital, or 15 miles in mountainous terrain, and would also lift severe limits on expansion of existing physician-owned hospitals.
3. Repeal certificate-of-need laws: The authors advocate against CON laws, which critics argue stifle competition between health systems and often work in favor of larger, consolidated entities.
The Trump administration has tied states’ potential Rural Health Transformation funding awards to certain policies at the state level, including the repeal of CON — but reforms are still catching up. This most recently played out in Tennessee, where legislators delayed a vote on a bill that would loosen the state’s CON. The bill was eventually passed through the state Senate April 16 after the delays were addressed in an April 1 letter from the Federal Trade Commission addressed to Representative David Hawk,a Republican from Greeneville. The letter urged the Tennessee General Assembly to repeal CON laws “as soon as possible.”
4. Price transparency enforcement. In December 2025, HHS, alongside the Labor and Treasury departments, proposed significant updates to healthcare price transparency rules. Comments for the proposed updates were due by March 2, 2026, and the proposals will take effect 12 months after the rules are finalized.
The update would strengthen many price transparency accountability for healthcare organizations while streamlining data collection and reporting processes.
5. Reforms to Graduate Medical Education funding. The authors underscores a need to replace formula-based GME payments with discretionary grants tied to educational outcomes — eliminating a $21 billion subsidy that advantages teaching hospitals, according to the report.
Justin Frederick, MD, chief medical officer of graduate medical education at Renton, Wash.-based Providence, recently told Becker’s that GME funding mechanisms are one of his biggest concerns about the future of the physician workforce.
“In 1965, when President Lyndon B. Johnson signed [amendments to] the Social Security Act creating Medicare, Medicaid and GME funding, there was a quote noting that education improves quality of care and that its costs should be borne partially by the hospital insurance program until communities bear that cost in another way,” Dr. Frederick said. “For a long time, we’ve relied heavily on federal subsidies for GME. When we developed a new internal medicine program in a vulnerable area of Southern California, it cost $2 million to $3 million to start — before reimbursement began. We faced a significant funding gap.
Fortunately, the community stepped up. The Raugh Family Foundation provided a multimillion-dollar grant as seed funding to launch the residency program. That’s what we need more of — community involvement and philanthropy to support training programs in high-need areas.”
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