Health insurers are fighting demands by hospitals for sharply higher reimbursement rates by threatening to drop the hospitals from their health-plan networks, and blaming them for higher insurance premiums.
“We’ve never seen the kind of increases we’re seeing right now” from hospitals, says Aetna Inc. President Mark Bertolini. Five years ago, a typical rate increase was about 5%, but this year Aetna granted 50 “must have” rate increases of more than 20%, Mr. Bertolini says.
In a fresh battle, Stellaris Health Network, a four-hospital system in Westchester County, N.Y., just asked a unit of health insurer WellPoint Inc. to increase its payments by 16% this year—in part, so that Stellaris could fund a new cancer center, according to the insurer.
The hospital’s contract is set to expire at the end of the month, and WellPoint’s Empire BlueCross BlueShield unit is pushing back. It sent letters to members on March 2 warning them that the insurer might lose the hospitals from its network.
Negotiations over similar reimbursement issues dragged on for months before Stony Brook Medical Center in Stony Brook, N.Y., inked an agreement Wednesday with Aetna Inc.; the two sides had been without a contract for a month and Aetna had sent notices of termination to its members.
Last week, Continuum Health Partners, a coalition of five New York City hospitals, resolved a protracted dispute during which UnitedHealth Group Inc. said the hospital initially asked it to raise payments by 40%. During the negotiations, UnitedHealth had warned its members that the contract with the hospitals was at risk.
The Hospital of Saint Raphael in New Haven, Conn., is battling with WellPoint’s Anthem unit. Talks there are pushing up against an April 1 deadline and have triggered an investigation by Connecticut Attorney General Richard Blumenthal. A WellPoint spokeswoman says the company is still seeking a fair and equitable contract.
Hospitals argue that low Medicare rates and cuts to Medicaid mean that hospitals have to get money from elsewhere, and increasingly that is private insurers. Rising ranks of uninsured Americans have led to more uncompensated care and have swelled the rolls of Medicaid, exacerbating the problem.
But insurers contend that in recent years big hospital systems have been buying up smaller medical centers and using their dominance in a region to demand big rate increases. America’s Health Insurance Plans, a trade organization, points to data showing hospital markets are 47% more concentrated than they were 13 years ago.
The dispute goes to the heart of insurers’ objections to the health overhaul legislation that is expected to come before the House as soon as this weekend. They say it unfairly targets their industry without doing enough to control health-care spending from other parts of the medical system. In new print ads that debuted this week, the insurance industry’s trade group is stepping up criticism of hospital prices, saying average costs for a day in the hospital is $3,000.
More – $$ Wall Street Journal – March 19, 2010