Medicare Advantage plans used as leverage in hospital-insurer talks
Hospital Systems Employ New Tactic in Negotiations with Health Insurers
In their ongoing negotiations with health insurers, hospital systems have adopted a bold strategy: removing themselves from the networks of Medicare Advantage (MA) plans. Medicare Advantage is a program that allows beneficiaries to receive their Medicare benefits through private insurance plans.
This tactic is becoming increasingly common. For example, starting in 2024, Scripps Health in San Diego will no longer accept any MA plans at its hospitals or physician clinics. Other health systems have taken a similar approach by focusing on specific insurers. St. Charles Health System in Oregon, for instance, no longer accepts MA plans from HealthNet, Humana, and WellCare. Baptist Health in Kentucky, Vanderbilt University Medical System in Tennessee, and Memorial Hermann Health System in Texas have also dropped the MA plan with Humana. Baptist has additionally terminated such plans from United HealthCare and WellCare, while Bon Secours in Virginia has ended its partnership with Anthem Blue Cross.
Increasing Challenges and Tension
According to Michelle Millerick, senior associate director of health insurance coverage at the American Hospital Association, hospitals and health systems across the country are facing mounting challenges with certain commercial insurers, including Medicare Advantage plans. Millerick explains that there is growing tension due to the administrative burdens associated with insurer policies, as well as delays and denials in approving and paying for patient care that should be covered. As the enrollment in MA plans continues to rise, these issues are becoming more acute for patients and their healthcare providers.
When a hospital system removes itself from an MA plan’s network, patients are left with a difficult choice: either pay more to stay with that hospital system or seek care elsewhere.
Hospitals’ Perspective
Hospitals argue that MA plans create obstacles to providing optimal patient care. Dr. Steven Gordon, president and CEO of St. Charles, states that Medicare Advantage in Central Oregon has failed to deliver on its promises. Instead of promoting seamless and high-quality care, the program has become a fragmented system plagued by administrative delays, denials, and frustrations. According to Dr. Gordon, the sicker a patient is, the more hurdles they and their care teams face.
James Gelfand, president and CEO of the ERISA Industry Committee, believes that the issue goes beyond administrative burdens. He suggests that insurers focus on obtaining higher reimbursement rates from private plans and utilize government health programs to achieve this goal. Gelfand argues that hospitals are willing to remove themselves from MA plan networks because it gives them more leverage in negotiating higher reimbursement rates from employer-based plans, which typically offer higher payments than MA plans.
Ensemble Health Partners, a company that assists hospitals in securing better rates from insurers, provides tips on going out of network on its website. The company shares success stories of clients who have leveraged an out-of-network strategy to achieve contract rates double the standard annual increase. This demonstrates the potential benefits hospitals can gain from taking such actions.
Increased Bargaining Power and Concerns
Hospitals have gained increased bargaining power in recent years through mergers, with 1,887 hospital mergers announced between 1998 and the end of 2021. This consolidation allows hospitals to have a larger market share, giving them more leverage over insurers. However, research on hospital mergers suggests that they primarily serve to enhance bargaining power with payers, resulting in increased costs without significant improvements in quality.
James Gelfand expresses concerns about the impact of these negotiations on employees. If insurance companies do not reject the hospitals’ demands, premiums may rise, leading to higher deductibles and increased cost-sharing for families.
Overall, the negotiations between hospital systems and health insurers, particularly regarding Medicare Advantage plans, are becoming increasingly complex and contentious. The decisions made by hospitals to remove themselves from MA plan networks have significant implications for patients, providers, and the healthcare industry as a whole.
What concerns do health insurers have about hospitals’ actions in negotiations and their potential impact on patient access to care?
Ves that hospitals are taking this drastic step in negotiations as a way to regain control over their patient care and financial viability. He explains that hospitals are tired of being at the mercy of insurance companies and are looking for alternative ways to ensure they can provide high-quality care without being hindered by administrative burdens and reimbursement delays.
Impact on Patients
The withdrawal of hospital systems from Medicare Advantage networks has significant implications for patients. With fewer options for receiving care, patients may have to pay higher out-of-pocket costs if they want to continue receiving treatment from their preferred hospital system. This can put a financial strain on individuals, especially those with chronic conditions who require ongoing medical care.
Furthermore, patients may be forced to switch healthcare providers and disrupt their ongoing healthcare relationships. This can lead to suboptimal continuity of care and potential gaps in treatment.
The Response from Health Insurers
Health insurers, on the other hand, argue that hospitals’ actions are jeopardizing patient access to care. They claim that hospitals are using their leverage to demand unreasonable reimbursement rates, which result in higher premiums for beneficiaries.
Future Outlook
As hospital systems continue to remove themselves from Medicare Advantage networks, negotiations between hospitals and health insurers are likely to become more contentious. The burden falls on patients, who may have to navigate the complexities of insurance coverage and choose between affordability and continuity of care.
A potential solution lies in improving the negotiations process between hospitals and insurers. Stakeholders need to come together and find ways to address the administrative burdens, reimbursement delays, and coverage denials that have strained their relationship. By focusing on patient-centered care and shared decision-making, hospitals and insurers can work towards a more sustainable and equitable healthcare system.
Ultimately, it is crucial to strike a balance between the financial viability of hospitals and the accessibility and affordability of care for patients. As negotiations continue, the healthcare landscape could undergo significant changes, shaping the future of healthcare delivery in the United States.
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