Fitch: Hospital Charge Growth Expected to Remain Slow

Hospital charge growth is expected to remain slow in the coming years, according to a Fitch Ratings report.

According to CMS, average hospital charges for most services increased by less than 5 percent in 2011 and 2012, based on data from more than 3,000 hospitals that accept Medicare. Continuing pressure on reimbursements and flattening consumer price index growth for hospital services are expected to keep the growth rate for hospital charges below its historical average, according to Fitch.

Furthermore, Medicare pay cuts resulting from sequestration — which took effect in April 2013 — will slow growth in hospital charges. Sequestration has an estimated annualized impact of $11 billion for healthcare providers, according to the report.

The impact on hospitals will vary depending on reimbursement methodology and payer mix. The report states, “Providers reimbursed under the percentage of charge methodology will likely continue to use charge increases to offset reimbursement pressures from other payers, including Medicare. And providers with a very high exposure to government payers (Medicare and Medicaid) will only have a limited capacity to use charge increases to generate a meaningful benefit to their bottom line.”