Dishonest medical billing hurts small business and all Californians

Small businesses create and sustain communities. They provide the culture and vibrancy that make each community distinct, and ultimately the places we call home. We must do all we can to support environments that allow our entrepreneurs to bounce back from economic instabilities, grow into the future, and expand their consumer reach. That starts with ensuring that all players in the community are conducting their business fairly and honestly.

Although entrepreneurs are no strangers to challenges, the cost of health care has simply become a problem too big for even the most innovative to tackle alone. As lawmakers look for ways to rein in costs and eliminate fraud and waste, they should prioritize ending hospitals’ use of “dishonest billing.” Dishonest billing is when hospitals secretly reclassify a doctor’s office they own as a hospital-based setting. This seemingly minor billing nuance can increase the cost of care by as much as 300 percent.

This continued rise in costs is due to a lack of market competition and pricing transparency, which allows for waste, fraud and inflated prices. A federal report estimates that nearly 10 percent of our health spending results from fraudulent billing. Other studies have found hospital care has become the single largest driver of health care spending, representing more than $1 out of every $3 spent on healthcare in this country. That’s because for every $100 of their costs, hospitals charge $417. Those are profit margins we as business owners could only dream about.

As a small business owner, I have experienced the rapid rise in the cost of health care, with seemingly no end in sight. Over the last decade, the cost of providing employee health coverage has risen 43 percent, surpassing adjustments for inflation and increased wages. It’s estimated over the next year, the average cost to provide employees’ health care coverage will increase another 6.5 percent to more than $13,800 per employee.

Employers like me will be forced to pay more to provide the quality coverage our employees deserve, leaving less to reinvest into our business and our employees. Nearly three years since the onset of the COVID-19 pandemic, small businesses are still recovering from the disruption. Multiple shutdowns, ever-changing restrictions, and labor shortages, coupled with historic rates of inflation, have forced businesses to innovate and adapt. For some, that meant a complete operational restructure.

Despite this seemingly endless barrage of new and unanticipated challenges, the cost of health insurance continues to rank as the top concern for small business owners and hasn’t changed in the last 30 years.

These last few years have tested the entrepreneur’s spirit. These hardships are especially true in California, with reports indicating 65,000 businesses have left the state, citing exorbitant operational costs.

There is no question that small businesses have faced challenge after challenge, but despite pivoting from one new challenge to the next, their biggest burden remains unchanged: the high cost of providing employee health care coverage.

Not only are employers strained, but the effects trickle down to the employees that keep these businesses alive. It is reported that half of all Californians have skipped or postponed some type of healthcare because of costs in the last 12 months.

We need state and federal legislation that promotes health care competition, which will lower the cost of care and lower the premiums needed to provide health insurance for employees.

Ending dishonest billing is the solution we can all unite on to lower costs and provide much-needed relief to our business communities.