Hospitals hike prices for evaluation and management services

Hospital charges for services like emergency department visits and initial hospital care continue to grow faster than other types of care, according to a new study.

Hospitals boosted their median charges for evaluation and management services by 7% and related negotiated rates rose 5%, according to FAIR Health’s analysis of November 2020 to November 2021 high-frequency claims from their database of more than 36 billion claims. Hospital E/M charges and negotiated rates—excluding facility fees—increased the most over that span out of the six categories FAIR Health studied: office E/M services; non-E/M services like psychiatric care, dialysis and immunizations; radiology; surgery; and pathology and laboratory.

Price inflation for hospital E/M services outpaced all other categories the not-for-profit research firm studied for the fifth-consecutive year. Related median charges jumped 6% and negotiated rates ballooned 10% from November 2019 to November 2020.

“It will be interesting to see what extent things will change, like with what we saw with the No Surprises Act,” said Robin Gelburd, president of FAIR Health.

The No Surprises Act aims to curb healthcare costs by protecting patients from surprise bills, like when someone is unexpectedly charged for an out-of-network specialist in an in-network facility. The site-neutral payment policy, where Medicare pays hospital-based outpatient departments and independent physician offices the same rate for E/M services, and the price transparency rule have similar goals. Yet, many hospitals are not complying with the transparency mandate.

In addition to federal law, there have been an array of state-led interventions that look to hold health systems in check through price caps and cost growth benchmarks. But many of these endeavors have yet to meaningfully limit annual price hikes, policy experts said.

The increase in hospital charges and negotiated rates indicates that there continues to be a lack of competition, said Barak Richman, a law and business administration professor at Duke University. The data may reflect hospital acquisitions of physician practices, which tend to lock-in hospital market share and their control of patient flows, he said.

“The rise in hospital charge and allowed amounts suggest we’re still going in the wrong direction,” Richman said. “That the rate of rise is faster than the other categories means that we continue to accelerate in the wrong direction.”

Charges and negotiated rates for hospital E/M services have steadily increased since 2012, outpacing all other categories. Related charges jumped 28% and negotiated rates surged 26% from May 2012 to May 2017, FAIR Health data show. Hospital E/M charges and negotiated rates both increased 7% from November 2017 to November 2018.