Medicare patients have secondary insurances that kick in the remainder of payment often up to the negotiated amount that an entity has with the private insurer. I don't believe these payments are reflected in the Medicare utilization data academic centers love to quote, but they likely account for the profound differences in reimbursement between freestanding and hospital/academic centers. If I'm treating a medicare/PPO patient, my max reimbursement is determined by the PPO contract, not the Medicare contract. Medicare will pay 80% of "Medicare Allowable," and the PPO kicks in the rest up to our negotiated amount. Our best contracts may hover in the 125-150% of Medicare range, so in a best case scenario, we may get an additional 70% of Medicare allowable (80 + 70= 150). Importantly, none of our contracts have a cap on the secondary payment. If the same reimbursement structure holds true for hospitals/academic centers (esp no cap on the secondary payment), they may be getting 500%+ of Medicare allowable from the secondary insurances, even though they receive only 80% from Medicare. So from a purely Medicare cost standpoint, they may look reasonable, but this doesn't tell the real story because they are gouging on the private end.
As others have pointed out, the real enemy of these places is the Medicare Advantage type plans where the health plan is globally at risk rather than serving as an insurance agent. My neck of the woods has a heavy medicare advantage-type insurance structure, and they are putting a beating on the academic entities. Of course, the academics are trying to set up all sorts of questionable arrangements to circumvent this (one center is essentially treating under 2 separate licenses in the same facility to simultaneously bill hospital and foundation rates depending on the insurance), but so far they've been shut out from a hefty percentage of the business.