CarePoint Health CEO Dennis Kelly Calls for a New Healthcare Reimbursement System

JERSEY CITY, N.J., May 13, 2015 /PRNewswire-USNewswire/ -- CarePoint Health CEO, Dennis Kelly, responded to increased legislative attention attempting to identify a solution to out of network healthcare costs. He called for the creation of a system of equivalent reimbursement rates for all patient encounters that will expand the ability for ALL individuals to receive care.

"As a safety net provider CarePoint Health is grateful to be engaged in the current debate over out of network costs and I am pleased to answer the call to identify solutions," said Kelly.  "We in New Jersey are seeking to find answers on how can we achieve universal access to quality healthcare at low cost.  If the legislature believes that rates must be set, it must be done holistically and not for just one segment of reimbursement.  A system where providers are paid an equivalent reimbursement rate for services rendered in all settings for all patients, and the cost of providing care for our State's 1.3 million uninsured is shared by all," continued Kelly.   "While we understand the need to address this issue we believe that partial rate setting is not a solution. The solution needs to address the root issue - equivalent payment for all patient encounters to solve the issue of disparate payer mixes through-out New Jersey.  Out of network payments sustain care today when providers are left with no other options to bridge the revenue gap.  If this source of funding is removed, but uncompensated/undercompensated care continues, the system becomes unsustainable."

This longstanding challenge has existed since New Jersey deregulated its healthcare system in 1993 and shifted from a rate setting system to a free market model, where healthcare providers and payers negotiate payment rates to cover the costs of services provided to insured patients, while government pays for healthcare services offered to the indigent, uninsured, undocumented, and elderly, through Medicaid, Medicare, and charity care reimbursements.   The deregulation of the healthcare market place brought with it a number of severe consequences for urban hospitals, such as significant cuts to uncompensated care reimbursement (that were originally covered by the government at 100 percent of costs), the discontinuation of the state government subsidizing Medicare funding shortfalls and cuts in Medicaid payment rates to providers. Some of these changes undoubtedly contributed to the closure of nearly 26 acute care hospitals since 1993 (the time of deregulation).

Keep Hospitals Open

"The current legislative debate regarding out of network has focused on only one aspect of a broken system," argued Kelly. "If you legislate direct rate setting on out of network charges or indirectly through arbitration (as is being considered), the legislature will be removing the only aspect of a free market system that providers have to ensure adequate reimbursements.  By capping out of network reimbursements without ensuring a reciprocal increase in payments for Medicaid, uninsured, and in-network, many urban hospitals will not survive and in CarePoint Health's case, our hospitals may be forced to close."

Many of the recent discussions about capping out of network payments to hospital providers are simply a ruse to protect insurance company profits and enable insurers to maintain the advantage when negotiating their reimbursement agreements with hospitals; a practice that will likely result in the closure of more urban New Jersey hospitals.  Understood in this context, the State should be careful not to undermine the only piece of negotiating leverage that small, community-based urban hospitals have in their effort to bring insurers to the negotiating table, the threat to terminate a contract and go out of network.

While many in the insurance industry view the uninsured as a burden, we believe that care of the poorest among us, is our core responsibility. In many parts of Hudson County, CarePoint Health's facilities, Neighborhood Health Centers (https://www.youtube.com/watch?v=cmZmS2VVcVY&feature=youtu.be), and affiliated physician practices are the safety net for these individuals and families. Providers spend too much time trying to get paid, and not enough time focusing on what they are paid for. Since 2008 our team has continually been searching for the right model of care and reimbursement in order to meet the needs of the patients and the providers.  We have focused on communities like the ones we serve where we are treating predominately Medicaid and uninsured patients.  What we have discovered is that this equation ultimately drives providers out of the market and leads to hospital closures.  We are determined not to let that happen in Hudson County but need help from our partners in government and the insurance industry.    

Comprehensive System of Reimbursements for Real Costs

A system with equivalent reimbursements would allow hospitals, physicians and other healthcare providers adequate payments to cover the real costs of providing care while ensuring increased access to both primary and specialty providers for the residents of our state. This solution would also address the issue of transparency of cost for the real consumers of healthcare services; the patients we treat. A sustainable system must have the ability to adjust reimbursements for individual markets to reflect the significant variability of uninsured patients throughout our state.

Don't Expand Coverage Without Care

This system would provide universal healthcare access for all of New Jersey's residents and would pay providers for healthcare services according to a uniform and equivalent rate structure.   In a concept articulated by Clayton M. Christensen, a noted Harvard Business School leader on innovation, efforts to try and reform healthcare that focus solely on how to pay for rising healthcare costs without addressing the underlying cost drivers is tantamount to creating a system that expands coverage without care. ^[1] In the last twelve months alone, Medicaid enrollment is up throughout New Jersey, but the number of physicians that are willing to treat patients with Medicaid insurance continues to decline due to inadequate reimbursement. According to a recent CDC Study^[2], New Jersey ranks last in the United States in the percentage of physicians willing to accept new Medicaid patients.   

Shared Responsibility

CarePoint Health's proposal to refrain from partial rate setting and move to a new reimbursement system, would address the entirety of the current dysfunctional healthcare system and not just a single component. "The rising cost of healthcare has become the number one domestic issue facing our country. Yet, in New Jersey, the debate has focused only on the provider side of the equation, with little to no discussion about the rising profits of insurance companies, the exorbitant costs of pharmaceuticals and medical devices, and the overutilization of services.  The only way to address this issue is for EVERYONE to accept their share of responsibility and not regulate fees piecemeal", said Kelly. "While this is a complex and nuanced issue without a perfect remedy, the remedy does need to focus on the diagnosis rather than the symptom. Regulated and standardized reimbursement rates only work when they apply across the board to all patient encounters.  There cannot be a reduction on the commercial payments (whether contracted or out of network) without an equal offsetting increase for the uncompensated care.  The system has worked itself into a state of homeostasis that will require delicate reform to avoid unintended consequences.  The current discussion only addresses one side of the equation and does not solve the core problem."

Next Steps

In the coming weeks, representatives from CarePoint Health's executive team will be reaching out to stakeholders from throughout the healthcare community in an effort to build consensus behind a regulated, all patient encounter equivalent rate system, and provide support to the efforts being made to achieve this.  Additionally, CarePoint invites the CEOs of our partners in the insurance industry to a public conversation to achieve a sustainable model for care for all of New Jersey's residents, and not just the insured residents.

For media inquiries, contact:
Jarrod Bernstein
CarePoint Health
Director of Corporate Communications
Phone: 201-884-5300
Email: [email protected]

About CarePoint Health

CarePoint Health brings quality, patient-focused health care to Hudson County. Combining the resources of three area hospitals – Bayonne Medical Center, Christ Hospital in Jersey City, and Hoboken University Medical Center – CarePoint Health provides a new approach to deliver health care that puts the patient front and center. We leverage a network of top doctors, nurses and other medical professionals whose expertise and attentiveness work together to provide complete coordination of care, from the doctor's office to the hospital to the home. Patients benefit from the expertise and capabilities of a broad network of leading specialists and specialized technology. At CarePoint Health, all of our medical professionals emphasize preventive medicine and focus on educating patients to make healthy life choices. For more information on our facilities, partners and services, visit us at www.carepointhealth.org.  For information on CarePoint's Neighborhood Health Centers visit https://www.youtube.com/watch?v=cmZmS2VVcVY&feature=youtu.be

[1] The Innovator's Prescription: A Disruptive Solution for Healthcare.

[2] National Ambulatory Medical Care Survey Electronic Medical Records Supplement, 2011

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SOURCE CarePoint Health