Hospital Pricing Increases A Staggering 244% in 3 Years


By Justin Leader
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The attached graph, sourced from the Bureau of Labor Statistics, reveals a worrying trend that should be a wake-up call for all plan sponsors. Between January 2000 and December 2023, hospital services experienced a staggering 243.7% increase in prices, significantly outstripping the overall inflation rate of 82.4% during the same period. This isn’t just an anomaly – it’s a red flag.

The dramatic surge in costs for hospital services can’t simply be attributed to inflation. It’s becoming increasingly clear that there are systemic issues at play. Many claims aren’t being appropriately screened for compliance with regulations such as IRS 501(r), which provides clear guidelines intended to protect consumers, including group health plan members.
 
In our reviews, we’ve identified numerous instances of improper billing practices. Unbundling of services, egregious overpricing, and upcoding at the point of service are just some of the issues that inflate hospital claims. These practices not only drive up costs for plan sponsors but also place an unjust financial burden on members.
 
Plan sponsors have a fiduciary and moral obligation to ensure that the claims they pay are fair and just. It’s time to take a closer look at the claims process, enforce rigorous claim review protocols, and challenge hospitals to adhere to billing practices that are both ethical and compliant.
 
Inaction is costly, both financially and in terms of member trust. We urge all plan sponsors to treat this data as a call to action – to review, reform, and advocate for fair healthcare pricing. The health of our healthcare system, and the wellbeing of those it serves, depends on it.