GOP lawmakers are proposing a bill that would roll back an Obamacare ban on new physician-owned hospitals with an aim to increase competition among hospitals and decrease costs.

Sens. James Lankford (R-OK), Bill Cassidy (R-LA), Thom Tillis (R-NC), and Rand Paul (R-KY), among other Republican members, are cosponsoring the Patient Access to Higher Quality Health Care Act, which would allow physician-owned hospitals to participate in Medicare and Medicaid, as is currently prohibited under the Affordable Care Act. A similar bill was also introduced in the House by Rep. Michael Burgess (R-TX) and congressman Henry Cuellar (D-TX).

President Barack Obama's signature 2010 health law included provisions that prevented existing physician-owned hospitals from expanding facility capacity and new physician-owned hospitals from participating in Medicare and Medicaid with some exceptions, arguing that it would help prevent physicians from referring their patients to facilities that they have a financial stake in.

"It is clear we need more options and innovation in health care, not less,” Lankford said in a statement Thursday. "The Affordable Care Act unfairly prohibits the creation and expansion of physician-owned hospitals, reducing yet another health care access point for Oklahomans and people around the country, particularly those on Medicare and Medicaid. My bill removes the ACA’s ban on [physician-owned hospitals] and allows them to offer innovative services that can be tailored to meet patients’ needs."

Proponents of the bills claim that removing the ban would drive down healthcare costs, as hospitals would face more competition, and allow physician-owned facilities to expand, offering patients more options for their care, particularly in rural areas.

"Allowing doctors to own and run hospitals would give rural communities another option to maintain local high-quality care and encourage local investment in existing hospitals," Lankford and Brian Miller, a nonresident fellow at the American Enterprise Institute, wrote in an op-ed for the Wall Street Journal. "It’s time to reopen the free market in healthcare and let the power of competition do its work."

Physician-owned hospitals represent less than 5% of all 5,700 hospitals nationwide, but 73% of them have three or more stars in the Centers for Medicare & Medicaid Services' overall hospital quality rating system, suggesting that most provide high-quality care, according to a statement from Republican senators.

The Centers for Medicare & Medicaid Services has recently taken steps aimed at helping rural hospitals stay in business. Under a new Medicare provider designation established through the Consolidated Appropriations Act of 2021, small rural hospitals with no more than 50 beds are allowed to apply for a rural emergency hospital designation and receive Medicare funding for providing emergency services.