Your surgical costs are not a vendor problem. They are not a plan design problem. They are a market structure problem. And the market structure was built by the people sending you the invoices.
Every reference-based pricing strategy, every direct contract, every center of excellence arrangement your advisor has brought you operates inside that structure. They are workarounds. Smart ones. But workarounds. The underlying architecture that makes them necessary has a name, a date, and a federal docket number - and for the first time in fifteen years, that architecture is being questioned in a place where your voice can actually change the outcome.
The name is Section 6001 of the Affordable Care Act. The date is March 23, 2010. The docket is CMS-1849-P. Comments close June 9, 2026. What happens next depends on who shows up.
What the data actually shows
Section 6001 froze physician-owned hospitals out of Medicare participation, capped existing facilities at their 2010 bed and operating room counts and ended new physician-owned surgical competition with dominant health systems. The lobbying effort was led by the American Hospital Association and the Federation of American Hospitals. Their argument was patient cherry-picking - that physician-owned hospitals were skimming high-margin surgical cases and leaving traditional hospitals to absorb lower-margin services. Congress accepted that argument. The data since has not.
A 2023 commissioned study analyzed 650,386 Medicare discharges across 186 physician-owned hospitals. Researchers from UConn Health and Loyola University Chicago, commissioned by the Physicians Advocacy Institute and The Physicians Foundation, found patient demographics and comorbidity levels statistically similar between physician-owned and traditional hospitals in the same hospital referral regions. On the 20 most expensive Medicare conditions, physician-owned hospitals produced savings of 8.6% to 15.2% - projecting to approximately $1.1 billion in potential annual Medicare savings.
There is a counter-study. Dobson DaVanzo, commissioned by the Federation of American Hospitals in 2023, found physician-owned hospitals treat younger, less complex, less likely to be dual-eligible patients and carry lower uncompensated care costs. The hospital lobby will cite this in the comment docket. Advisors should know it exists and know who paid for it.
What neither study resolves - and what matters most to self-funded employers - is the competitive dynamics question. Whether or not physician-owned hospitals treat a slightly different patient mix, the absence of their competition in a market produces a measurable effect on commercial prices. When one or two systems control the majority of inpatient surgical capacity in a market, they price accordingly. The consolidation that followed Section 6001 reinforced that dynamic across market after market.
By 2024, nearly 80% of all physicians were affiliated with hospitals, health systems, or other corporate entities - up from a majority still operating independently before 2010. The market structure producing elevated surgical costs for self-funded employers did not emerge organically. It was constructed, accelerated, and in significant part legislated.
What CMS is testing
CMS is not proposing to repeal Section 6001. That requires Congress, and three current bills - H.R. 4002 (full repeal), H.R. 2191 and S. 1390 (rural carve-out) - have not moved.
What CMS is testing is whether Innovation Center authority under Section 1115A of the Social Security Act - which allows CMS to waive Medicare statute for demonstration models - can be applied to specific provisions of Section 6001 within the Transforming Episode Accountability Model. TEAM is a five-year mandatory bundled payment model covering five surgical procedures: coronary artery bypass graft, lower extremity joint replacement, major bowel procedure, surgical hip and femur fracture treatment, and spinal fusion.
The economic logic is straightforward. If physician-owned hospitals participate in a bundled payment model alongside traditional hospitals under identical payment rules, CMS generates real comparative data on episode cost and quality. That data either validates or refutes the efficiency argument for physician-owned surgical competition. That is the Innovation Center's mandate - to run exactly this kind of test.
Three questions in the RFI determine whether the test is meaningful. Whether opt-in extends beyond grandfathered 2010 facilities. Whether geographic participation goes beyond already-selected markets. And whether operational waivers - bed counts, operating room caps, service line restrictions - are broad enough for physician-owned hospitals to actually scale participation. Without meaningful answers to all three, the demonstration produces limited data and the market structure question goes unanswered for another decade.
Who is already shaping the outcome
Eleven months before this rule was filed, the Blue Cross Blue Shield Association submitted a twenty-six page letter to the DOJ Antitrust Division's Anticompetitive Regulations Task Force (Docket ATR-2025-0001), signed by Anshu Choudhri, Vice President of Policy Development. BCBSA contracts with 96% of American hospitals and covers one in three Americans. They asked for targeted exceptions to Section 6001 - and explicitly excluded surgical-specialty physician-owned hospitals from those exceptions, citing the same patient selection concerns AHA used in 2010.
That framing is already embedded in the regulatory environment. AHA and FAH will build on it. The likely result, if employer voices are absent from this docket, is a narrowly constructed opt-in limited to grandfathered community hospitals in rural markets - leaving surgical-specialty facilities exactly where Section 6001 left them in 2010.
Surgical-specialty physician-owned hospitals - orthopedic, spine, cardiac, general surgery - are where the commercial pricing leverage question is most acute for self-funded employers. Those procedures drive the largest episode costs in most employer health plans. Those are the facilities the hospital lobby is most motivated to keep out of competition. And those are the facilities the current comment trajectory is positioned to exclude.
The voice that is missing from this docket
Physician groups are filing. The hospital lobby is filing. Payers are filing. Every organization with a financial relationship to the current market structure has representation in this docket.
The self-funded employer does not. Not at scale. The large employer trade organizations - the American Benefits Council, the ERISA Industry Committee, the Business Group on Health - engage on pharmacy, transparency, and coverage mandates. They are not visibly engaged on CMS-1849-P. And none of them represent the mid-market self-funded employer: 200 to 2,000 employees, fully at-risk, no Washington office, no trade association covering this specific docket. That employer is completely absent from the comment record right now.
That employer is also the one most directly exposed to consolidated surgical pricing. They do not have the contract leverage of a Fortune 500 plan. They do not have the actuarial staff to model the cost implications of what this rule does or does not produce. They rely on advisors to tell them when something at the federal level is going to affect their plan. This is one of those moments. Most of their advisors have not told them yet.
The argument that belongs in this docket from the employer side is economic, not ideological. The data on physician-owned hospital quality and patient selection does not support continued operational restrictions as a permanent market protection mechanism. Self-funded employers in consolidated markets have a direct, documentable financial interest in expanded surgical competition. And the Innovation Center's demonstration authority exists to generate the comparative data that should inform permanent policy - which means the test needs to be designed broadly enough to actually produce it.
What to do before august
For employers: the immediate action is not filing a federal comment. It is understanding what your surgical cost exposure looks like inside your specific market structure right now - before the final rule publishes in August and before your next renewal cycle. If you are in a market where one or two health systems dominate inpatient surgical capacity, your plan is already priced against fifteen years of zero physician-owned competition. That baseline changes if this rule is designed broadly. It does not change if it is designed narrowly. Either way you need to know which market you are in.
The questions worth asking your advisor today: What percentage of our surgical spend is concentrated in one or two health systems? What direct contracting or center-of-excellence options exist outside those systems in our market? And how does our cost architecture change if physician-owned surgical competition returns to this market in the next two to three years?
If your advisor cannot answer those questions, that is also useful information.
For advisors: read CMS-1849-P, published in the Federal Register on April 14, 2026. The final rule publishes in August. The advisors who understand what this rule produces will have a materially different conversation with their employer clients in Q4 than the advisors who don't. If you want to file a comment before June 9, the docket is open at regulations.gov, file code CMS-1849-P. But the minimum obligation is making sure your clients understand what is at stake in their market before the outcome is decided.
The market structure your employer clients are priced against for the next decade is being shaped right now. That is the conversation they are not having yet. It should be yours to start.
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