Hospitals and insurers dispute reimbursement rates

Health insurers and hospitals across the country are in a dispute about sharply higher reimbursement rates being demanded by hospitals.  Some insurers are threatening to sever contracts with these hospitals and are blaming them for the high insurance premiums being passed onto consumers.

According to The Wall Street Journal, a typical rate increase was about 5% five years ago, and now there are many hospitals demanding rate increases of more than 20%.

Hospitals argue that low Medicare rates and cuts to Medicaid, along with rising utilization and cost increases in labor, medical technologies and other supplies are driving up hospital costs.  Insurers assert that big hospital systems are using their dominance to demand big rate increases.  Insurers also contend that these double-digit requests from hospitals are the reason for their big premium increases, some of which have received disapproval from the Obama administration.

(Sources: Advisory Board Daily Briefing,, March 24, 2010; Wall Street Journal,, March 19, 2010)