To save U.S. health care, stop abusive hospital billing

OPINION:

Health care costs in the United States are rising fast, and families are paying the price. A large and often overlooked factor driving up premiums and out-of-pocket costs for American consumers is abusive billing by hospitals.

If we are serious about Americans’ well-being and their wallets, then it’s time decision-makers turn their attention to these dishonest practices.

In 2024, national health care spending increased by 7.2% to $5.3 trillion, or $15,474 per person. Health care spending now accounts for 18% of the U.S. economy, and it is expected to grow faster than gross domestic product in the next decade.

Workers and small businesses face higher insurance premiums and larger deductibles. Out-of-pocket spending alone reached $556.6 billion in 2024, growing nearly 6% in a single year. Even insured families increasingly delay care or take on medical debt as costs rise.

Hospitals are not just one contributor among many. They are the dominant driver of recent spending growth. A brand new analysis found that hospital spending accounted for $277 billion, or 40%, of the entire increase in national health care spending from 2022 to 2024, far more than any other category of care.

In 2024, hospital spending reached $1.63 trillion, nearly one-third of all U.S. health care expenditures, and grew 8.9% in a single year. That growth outpaced overall health care spending and translated directly into higher prices paid by private insurers, Medicare, Medicaid and patients themselves.

The problem is not simply how much care hospitals deliver but also how they bill for it. Sometimes, there are billing errors, but other times, it’s undeniably fraudulent.

Common practices include billing for services patients never received, charging twice for the same test or procedure and adding facility fees that inflate prices just because outpatient care occurred in a hospital-owned setting. Research has documented that “consumers often directly bear the brunt of these charges.”

Advertisement Advertisement

Upcoding is one of the clearest examples of how billing behavior inflates costs. A peer-reviewed study examining hospital discharge data found that from 2011 to 2019, the number of hospital stays coded at the highest severity level increased by 41%.

After adjusting for patient health, length of stay, and hospital characteristics, researchers “estimated that the increase would have been 13% in the absence of changes in coding behavior.”

The financial impact is substantial. Upcoding was associated with $14.6 billion in additional hospital payments, including $5.8 billion from private health care plans, $4.6 billion from Medicare and $1.8 billion from Medicaid. These are dollars ultimately paid through higher premiums, higher taxes and higher out-of-pocket costs.

One analysis found that technologies enabled by artificial intelligence reportedly use ambient listening to capture clinical interactions and analyze lab reports and physician notes and then assign billing codes that don’t accurately reflect the care given.

Where this technology was used, researchers often observed sharp spikes in the number of patients coded with conditions far more complex than the care they received, resulting in millions of dollars in improper and inflated charges.

Advertisement Advertisement

To make matters worse, independent physicians’ practices are being bought up like crazy by big hospital systems. Health care economists determined, “These acquisitions led to an average price increase of 14.1% for the acquired physicians.”

This paradigm can even result in hospitals billing extra “facility fees” on top of professional charges. These are ostensibly overhead charges but do not necessarily cover costs specific to the setting or the patient being billed.

The consequences are predictable. Higher hospital billing leads to higher costs for Medicare and Medicaid, employers and families. Medical debt rises and affordability worsens, even as total spending continues to climb.

Legislators and regulators must curb abusive hospital billing practices. For the sake of taxpayers, employers and patients, hospital billing integrity has to be treated as an urgent cost control imperative, not a technical footnote.

Advertisement Advertisement

Regulators should strengthen oversight. Congress should accelerate site-neutral payment reforms and limit excessive facility fees. At the very least, decision-makers shouldn’t undermine the tools that both public and private payers deploy to ensure billing accuracy or the penalties they impose to discourage repeat overbilling.

Hospital billing must be transparent, accurate and accountable before the bill reaches a kitchen table. Patients should not need forensic accounting skills to avoid being overcharged.

With hospitals accounting for the lion’s share of health care spending, and that cost rising by hundreds of billions of dollars every year, abusive billing is not a side issue. It is a core driver of America’s health care affordability crisis.

• Jason Altmire is an adjunct professor at the Texas Tech University Health Sciences Center. He has been an executive in the hospital and health insurance industries. He served three terms in the U.S. House of Representatives.

Advertisement Advertisement