Dishonest hospital billing is driving up healthcare costs
James Gelfand
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The midterm elections are over, government is divided, and the balance of power rests on razor-thin margins in both chambers of Congress. This could be a recipe for gridlock, where nothing gets done next year. Or it could be an opportunity for bipartisan action to address the key healthcare issues worrying most Americans.
According to Gallup, nearly 90% of eligible voters believe lowering the cost of healthcare is important. The same study showed that three-quarters of Americans would give healthcare affordability a grade of “D” or fail it outright.
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As lawmakers consider ways to address healthcare inflation, there is one solution on which they should be able to unite that would make a significant dent: ending hospital “dishonest billing.”
Your doctor’s practice may be owned by a large hospital group. And when you have an appointment, that hospital may secretly reclassify that visit as a hospital-based service in order to charge more money. That’s “dishonest billing.” On average, care labeled as “delivered in a hospital” costs 300% more than the same care delivered in an office-based setting. In one instance, a patient who experienced dishonest billing was slapped with a bill more than ten times the appropriate amount.
Thanks to the Affordable Care Act and other factors, more and more physicians are closing or selling their independent practices and joining larger hospital systems that have near-monopolies in their areas. The American Medical Association reports that the number of physicians employed at hospitals increased by roughly 50% between 2012 and 2020. Also, as of 2020, a majority of physicians were working for these large hospital systems rather than independently in private practice for the first time.
This lack of competition in and of itself results in higher prices for employers, their employees, and families. But when hospitals take advantage of this structure to charge an unjustified hospital premium, the cost of healthcare becomes unsustainable.
Ending “dishonest billing” would instantly save millions, if not billions, of dollars in wasteful spending in our healthcare system. It would also remove one of the biggest incentives hospitals have to consolidate and acquire more physician practices. Research shows that these ballooning hospital networks create monopolies, restrict choices for patients, increase costs, and lead to lower-quality care.
Fortunately, there is new federal legislation, recently introduced by Rep. Victoria Spartz (R-IN), that tackles this issue. The Transparency of Hospital Billing Act, H.R. 8133, was also mentioned in the House Republicans’ Healthy Futures Affordability Task Force report.
The bill requires individual doctor’s offices within big hospital systems to use a separate National Provider Identifier code so that employers, health plans, and patients can differentiate between a hospital and non-hospital setting. It also adds a “place of service” code to hospital bills so that payers know where the patient received care. Finally, the legislation establishes national billing requirements that would apply in all 50 states.
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It’s a simple, common-sense approach. So far, only Congressional Republicans have promoted this solution to dishonest billing, but there is no reason it should not win bipartisan support. Legislators from both sides of the aisle can join together to address a problem that nearly all Americans agree is crucial by making sure that hospital systems are transparent about where a patient received care.
Eliminating dishonest billing is essential to curtailing skyrocketing costs of hospital care, the largest component of national healthcare spending. Congress needs to act.
James Gelfand is President of the ERISA Industry Committee, ERIC, where he works to develop and advance public policies relating to healthcare on behalf of our nation’s largest employers.