Neonatal Intensive Care Units (NICUs) provide specialized, around-the-clock care for the most vulnerable patients—newborns in critical condition. In recent years, NICU admissions have risen across most U.S. states, increasing from 8.7% in 2016 to 9.8% in 2023[1]. With admission rates climbing and healthcare costs on the rise, it’s more important than ever to understand the factors driving these trends.
This article explores the key drivers of growing NICU utilization and expense as well as financial implications for the US health insurance industry, and shares strategies to help mitigate costs and improve clinical outcomes.
In the past decade, there has been an upward trend in admissions and costs for neonatal care. This rise spans across a broad range of maternal and gestational ages, though infants born to mothers aged 40 and older have shown the highest likelihood of NICU admission[2].
Percentage of infants admitted to NICU, by age of mother: US, 2016 and 2023
Figure 1: Significant increases from 2016 to 2023 were observed for each maternal age group (p < 0.05). Significant differences between age groups were observed (p < 0.05). NICU is neonatal intensive care unit.
Source: National Center for Health Statistics, National Vital Statistics system, natality data file, https://dx.doi.org/10.15620/cdc/174581
As NICU admissions increase, so do the associated costs. These expenses can vary widely based on factors such as the level of care required, the geographic region, and the hospital providing treatment. In 2021, the cost of a NICU stay ranged from $4,488 to $161,929 per day, with the average length of stay around 14 days—but this varied significantly, from as few as 3 days (10th percentile) to as many as 34 (90th percentile), but in serious cases stays can be much longer[3].
PartnerRe US Health historical claims data reveals significant variability in NICU daily rates, with charges ranging from $3,000 to as high as $60,000 per day for the same level of infant care. This wide range—often linked to provider contracting and hospital billing practices—creates challenges in accurately projecting claims and forecasting costs. While regional market dynamics play a role in this variance, the unpredictability highlights the need for more standardized pricing models, strong provider contracts, and proactive engagement strategies.
Main Types of NICU AdmissionsPremature birth remains the leading cause of NICU admissions. After discharge, premature infants remain at an increased risk for emergency department utilization and when these infants visit an ER, they are more likely to be readmitted. Emergent Conditions: NICU care is not exclusive to tiny preemies. Full-term newborns can require emergent care related to birth injury, breathing complications, infections, hypoglycemia (low blood sugar), or delayed feeding – and these stays can range from hours to months. Congenital anomalies: Conditions including structural heart defects, neural tube defects, metabolic disorders, chromosomal anomalies, and syndromes, may involve multi-specialty coordination, staged surgical interventions, prolonged hospital stays, intensive nursing support at discharge, and a heightened risk of re-admission. |
A combination of maternal, medical, and technological factors has contributed to the growing number of NICU admissions and the escalating costs of neonatal care:
Neonatal intensive care remains one of the most significant cost drivers for health plans. Although only 10% of births require NICU admission, these cases account for 85% of newborn healthcare expenses. Of those, an estimated 30% present opportunities for cost containment[7]. Several key factors contribute to the financial challenges associated with NICU care:
Neonatal intensive care remains one of the most significant cost drivers for health plans.”
Health plans and TPAs can play a significant role in mitigating the high costs associated with NICU stays by implementing proactive strategies at various stages. By acting proactively, health plans can ensure claims are accurate, minimize overpayments, and maintain cost-effective care management. Even short stay NICU claims may contain up to 25% in avoidable costs stemming from unbundled services, duplicate charges, or items that should have been included in the negotiated daily rate. Focusing on prevention, early intervention, and proper education through maternal case management and utilization management helps health plans not only improve the health of their members but also reduce the financial burden of NICU admissions.
When maternal case management is in place, high-risk births and NICU admissions could be reduced by identifying at-risk pregnancies early and ensuring consistent, personalized prenatal care. Nurses and social workers address medical needs and social barriers like housing, transportation, and food insecurity. Education during pregnancy and the postpartum period empowers families to make informed decisions, recognize warning signs, and seek timely care.
Significant advancements in preterm birth risk prediction are emerging, offering promising avenues to reduce NICU admissions and improve neonatal outcomes. New predictive tools, including biomarker-based tests like PreTRM® and immune profiling, are helping identify preterm birth risk as early as 18–20 weeks[8]. These advancements, along with machine learning models and digital health platforms, enable earlier, targeted interventions[9]. As these tools become more integrated into clinical practice, they hold the potential to significantly enhance maternal and neonatal health outcomes.
Even with strong maternal health programs, not all NICU admissions can be prevented. Utilization management (UM) should begin with the authorization of the appropriate level of care but must continue with active concurrent review to monitor the infant’s clinical status and ensure the level of care remains appropriate throughout the stay. At discharge and claim submission, reviewing documentation, coding, and billing accuracy is essential to control costs, validate charges, and flag potential unbundling or other discrepancies.
By acting proactively, health plans can ensure claims are accurate, minimize overpayments, and maintain cost-effective care management. Even short stay NICU claims may contain up to 25% in avoidable costs stemming from unbundled services, duplicate charges, or items that should have been included in the negotiated daily rate.”
Engaging with PartnerRe’s PULSE + Plus® clinical team early can help to identify appropriate claims for pre-payment review and address potential billing issues such as egregious mark-ups, unbundled services, non-FDA approved care, and other inaccuracies that could result in inflated costs. We leverage our vendor partnerships and strategic mindset to proactively manage risk and achieve the best clinical and financial solutions.
As a reinsurer and stop loss carrier, we understand the increasing impact of rising NICU utilization and associated claim costs on overall risk exposure. While some NICU admissions are unavoidable, this trend presents a valuable opportunity for health plans to proactively influence outcomes. By identifying early risk indicators and promoting strategies that balance quality care with cost efficiency, plans can help improve neonatal outcomes while managing high-cost claims.
Tina Anderson, AVP Clinical Services, PULSE + Plus®, US Health
[1] Martin JA, Osterman MJK. Increases in neonatal intensive care admissions in the United States, 2016–2023. NCHS Data Brief. 2025 Mar;525. DOI: https://dx.doi.org/10.15620/cdc/174581.
[2] Martin JA, Osterman MJK. Increases in neonatal intensive care admissions in the United States, 2016–2023. NCHS Data Brief. 2025 Mar;525. DOI: https://dx.doi.org/10.15620/cdc/174581.
[3] https://healthcostinstitute.org/hcci-originals-dropdown/all-hcci-reports/nicu-use-and-spending-1
[4] Complications in a Multiples Pregnancy | American Pregnancy Association
[5] Gestational Diabetes Mellitus (GDM) | Johns Hopkins Medicine
[7] https://5009501.fs1.hubspotusercontent-na1.net/hubfs/5009501/2025%20Campaign%20Files/Employer%20White%20Paper/ProgenyHealth_Employer%20Benefit%20Whitepaper_4.9.25.pdf?utm_campaign=Are%20You%20Covered%3F_Q2_2021&utm_medium=email&_hsenc=p2ANqtz-8EIB3KVO7fdNY72m_xWMnfZzix6z_alnVqjMv_fbJylb4B2joaAqjBgbmKuT_wROMwTFobuvvzGPojmIwRWoc5APKD-A&_hsmi=355766338&utm_content=355766338&utm_source=hs_automation
[8] Sera Prognostics PreTRM® Test Prevention Strategy Demonstrates 18% Reduction in Severe Neonatal Morbidity and Mortality in Newly Published AVERT Trial – Jul 9, 2024
[9] https://www.nature.com/articles/s41390-025-03815-6