The American Hospital Association has issued its 2026 Cost of Caring Report, which shows that hospital expenses are going twice as fast as hospital prices.
One of the key drivers of those cost increases is the amount hospitals must spend to attempt to collect payments owed by health insurers for medical care that the hospitals have provided the insurers’ members. This problem is particularly acute with Medicare Advantage plans. For example, the Report notes that hospitals spent nearly $18 billion in 2025 on overturning claims denials alone. As stated in the Report:
[T]he AHA estimates that hospitals spent a staggering $43 billion in 2025 trying to collect payments insurers owe for care already delivered. Prior authorization, claims denials, repeated documentation requests, and evolving billing and coverage rules require hospitals to staff large billing, coding, utilization management, and appeals teams, while also pulling clinicians away from direct patient care to complete forms, peer-to-peer reviews and medical necessity documentation.
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These burdens are particularly visible in Medicare Advantage (MA), where claim denials are both common and administratively costly.
The Report cited to a Health Affairs analysis finding that Medicare Advantage plans denied about 17% of initial claims submissions, 57% of which were ultimately overturned. The Report also found that Medicare Advantage insurers made nearly 53 prior authorization determinations in 2024, and that the percentage of appeals of prior authorization denials had increased from 7.5% in 2019 to 11.5% in 2024.
In a press release announcing publication of the Report, AHA President and CEO Rick Pollack stated:
Rising costs for labor, supplies, drugs, and administrative burdens caused by corporate insurers, combined with caring for sicker patients, have created challenges for hospitals and health systems. These strains are jeopardizing hospitals’ ability to provide around-the-clock care and services that patients and communities need.
The attorneys at Whatley Kallas, LLP have likewise found that health insurers and in particular the Medicare Advantage plans routinely inappropriately deny and underpay claims for medically necessary care. Whatley Kallas pursues these claims on behalf of many of our hospital clients.
The AHA’s 2026 Cost of Caring Report is linked here. The AHA’s press release is linked here.