Carter: Hospitals Pick Your Pocket, and Washington Lets Them

A large of those rising costs comes from something that can be fixed: hospitals and large health systems exploiting opaque pricing, inflating bills, and using consolidation to squash competition. Call it what it is: fraud when providers bill for care not delivered, and waste and abuse when the system rewards higher codes and higher facility fees for the same care.

It’s time conservatives demand accountability.

Let’s start with the billing games. Hospitals are increasingly coding patient visits as more medically complex than they really are, a practice known as upcoding, or “coding intensity.”

A recent analysis of Blue Cross Blue Shield claims from 2022 to 2025 found that the top 10 percent of hospitals drove the vast majority of detected increases in complexity coding. By early 2025, those high-growth facilities were coding about 60 percent of eligible inpatient admissions as “complex.” The study estimated this added roughly $22 million in excess maternity spending alone over the period. That money doesn’t appear out of nowhere — it comes from your premiums.

Then there are the facility fees and site-of-care markups. Get a routine test in a doctor’s office, and you pay one price. Get the exact same service in a hospital outpatient setting, or in a clinic that looks like a doctor’s office but is owned and billed like a hospital, and you can pay multiples more. The service is identical; the bill is not.

The Committee for a Responsible Federal Budget found that the same echocardiogram costs three times more in a hospital outpatient setting than in a physician’s office. Drug infusions can cost 3.2 times more. Those markups don’t buy better care. They buy leverage — and families are stuck paying for it through higher premiums and higher cost-sharing.

Next are the phantom charges: billing for tests and services patients never received.

The National Health Care Anti-Fraud Association estimates health care fraud costs between 3 percent and 10 percent of total health spending, potentially exceeding $300 billion. In November 2024, UCHealth in Colorado agreed to pay $23 million to resolve allegations of fraudulent billing for emergency department visits. These cases are symptoms of a system with too little accountability and too much complexity to catch wrongdoing quickly.

Unbundling is another trick. Rather than billing for a procedure as a whole, some hospitals break it into individual steps and charge for each one separately, running up a tab that no patient would ever agree to if the price were disclosed upfront.

None of this would sting so much if patients could shop around. They can’t. Hospitals have spent 20 years making sure of it.

Roughly 1,300 hospital mergers have taken place over the past two decades, and the Yale Health Care Affordability Lab calls consolidation one of the most underappreciated drivers of rising prices. And here is the key: when one system dominates a region, insurers have less leverage to say no. The system sets the price, insurers pass the costs to employers, and employers pass them to workers. Competition is what disciplines bad behavior — and in too many places, there is none.

Transparency rules haven’t solved the problem. Federal law now requires hospitals to post their prices, but most comply in the narrowest sense possible — burying unusable data in machine-readable files no ordinary patient can navigate. The spirit of the law has been honored nowhere near as faithfully as the letter.

Conservatives have long understood that markets only work when buyers have real information, real choices, and real recourse. We’ve championed cutting fraud, waste, and abuse in government programs for decades. The same instinct applies here. When hospitals bill for services never rendered, inflate diagnostic codes to collect more money, and use mergers to eliminate competition, they are gaming a broken system — at the expense of working families and the employers who provide their coverage.

The solutions aren’t complicated. Enforce price transparency with teeth: meaningful penalties and formats real people can actually use. Challenge anticompetitive hospital mergers before the last independent competitor disappears. Expand audits targeting upcoding and make the results public. Require clear, upfront disclosure of facility fees before a patient ever walks through the door.

No more blank checks. If you cannot show what you did, you should not get paid. That principle applies to every other industry in America. It should apply to health care, too. Families and employers have been absorbing inflated hospital costs for long enough. Washington needs to stop looking the other way.

James Carter served as Deputy Under Secretary at the U.S. Department of Labor (2006-07) and as Director of the America First Policy Institute’s Center for American Prosperity (2021-23).

 The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.