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Let's make a deal: Insurers and hospitals resolve disputes
I recently went to the bank and was greeted by a friendly pregnant manager who, after processing my financial requests, chatted about how she hoped to deliver her second child at the same hospital where her first was born. She couldn't guarantee the delivery location, however, because East Jefferson General Hospital was in a heated contract dispute with Blue Cross Blue Shield of Louisiana.
They have since reached an agreement and I'd like to believe that lovely bank manager was able to labor at her chosen hospital with no complications. But what if the insurer and hospital hadn't resolved their dispute? She and roughly 20,000 other Blue Cross policyholders would have been forced, through no fault of their own, to make difficult choices between paying exorbitant out-of-pocket fees to see their current physicians and receive various services (like the very personal experience of labor and birth) at EJGH or search for new doctors. All of that stress just so EJGH could potentially get an 18 percent increase in the reimbursement rates for services for Blue Cross policyholders?
I understand that contract negotiations between insurers and providers are routine, occurring across the nation all the time with little fanfare or even public knowledge. But lately, many of these debates are playing out in public, exposing the shallowness of both sides of this business. In the EJGH-Blue Cross squabble, EJGH supposedly was attempting to position itself alongside its top market competitor; Blue Cross wanted to shift from a fee-per-service schedule to a diagnosis-based payment schedule, which may have yielded a 9 percent increase in revenue.
In a similar clash, Blue Cross Blue Shield of Texas is currently refusing to pay an additional $120 million over three years to cover cost increases at hospitals owned and operated by Texas Health Resources. Blue Cross also wants to pay its millions upfront in a lump sum, but Texas Health wants its money reimbursed traditionally, after a claim is filed. This contract disagreement would affect 800,000 Blue Cross members in North Texas if they don't resolve the issues before Dec. 31, when the contract expires. Happy holidays, Blue Cross members.
Another 10,000 people may be affected by a conflict of payment terms if Rhode Island's Women & Infants and Kent hospitals, which are both run by the Care New England group, drop out of UnitedHealthcare's network. About 80 percent of births in Rhode Island occur at Women & Infants and Kent, and those hospitals also have the state's only intensive care units for sick and premature newborns. So, the consequences of a fallout between the hospitals and United could be dire.
The Rhode Island Business Group on Health criticized Care New England for expecting private health insurers to make up for shortfalls in payments from government programs. Care New England replied that premium increases were paying for profits and administrative costs at United, not just medical care. The hospital group added that it's merely asking for enough money to pay for salaries, liability insurance and medical supplies, and to maintain its ability to borrow money.
It seems to me that insurers and hospitals are forgetting their ultimate goal of providing quality care for patients and instead placing too much emphasis on profit. Blue Cross Blue Shield of Texas, for instance, has about $7 billion in reserves and Texas Health had $2 billion in assets at the end of 2008. That's right, billions. They should be working together for the greater good of health and well-being rather than nickel-and-diming each other in a power struggle. And, yes, I know times are tough, the economy is struggling, we're in the midst of a recession. But that doesn't excuse the haves from helping the have-nots. It certainly doesn't mean that, because insurers and hospitals want to play a game of chicken with each other, they can transfer costs to patients, many of whom are already paying steep healthcare premiums, co-pays and deductibles.
Insurers and hospitals must try to see the forest through the trees. Patients' care is being jeopardized; each player is accusing the other of greed while trying to bilk as much money as possible from each other. In many cases, the disputes are so hotly-contested that they escalate to lawsuits, forcing the courts to determine the least guilty party in a contract-payment mess.
Perhaps it's time to overhaul the current fee-for-service payment structure to a newly-agreed upon system that rewards providers for offering quality of care. That's a tall order, and the topic for another column. Meanwhile, I beg insurers and hospitals to put aside their differences and work together on behalf of the patients, who are at the mercy of these contract negotiations. - Dina
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