'It's like a shakedown': Payers, providers ditch the hushed voices in their fights

If payer-provider disputes were a reality TV show, just a few years ago viewers would have been hard to come by. 

The occasional conflicts that emerged during contract negotiations were hardly discernible to the public, shrouded behind closed doors and backroom deals. To industry insiders, information about impasses was dressed in corporate speak, void of meaningful detail and communicated with an air of coolness by both parties. If the stalemates over reimbursement rates dragged on for long enough or presented enough risk to patients and consumers, they'd warrant headlines for several weeks before outside pressure drove the parties to compromise. 

Today, the acrimony in payer-provider disputes is increasingly palpable and recasts what were once sterile, short-lived plotlines into a series of drawn out sagas. The protagonists and antagonists may vary depending on who you ask, but the victims are always the same: the patients. And as of late, payer-provider fallouts are affecting more and more of them. 

At the Becker's Hospital Review CEO + CFO November event in Chicago, hospital and health system leaders compared cost-cutting ideas amid the current financial environment, such as rescheduling window cleanings from once a month to once a quarter, and remarked that they find it difficult to sympathize with health insurers and their deep pockets. One CEO went so far as to note how his resentment has informed his communication style for contract negotiations: "I don't negotiate with terrorists."

Though many disputes were resolved in 2022, this year also saw some of the largest breaks in recent memory.

Since April 1, the largest payer and the largest hospital in Mississippi, BCBS and the University of Mississippi Medical Center, have been out of network because of a disagreement over reimbursement rates. Jackson-based UMMC is the state's only children's hospital, organ transplant center and singular provider of many other services. In addition to Mississippi's laundry list of ongoing healthcare crises, 750,000 people in the nation's poorest state have little to no access to covered healthcare.

"Everything in life is about money, power and sex," Mississippi Insurance Commissioner Mike Chaney told the Northeast Mississippi Daily Journal in October. "This is about money."

Despite pleas from the state, BCBS and UMMC have shown no indication either side will budge, and mediations around the dispute were suspended indefinitely in October. The conflict between the two organizations has become so hostile that BCBS is currently suing three UMMC executives for defamation, alleging they harmed the payer's reputation since the fight began.

"It's like a shakedown," Mr. Chaney said. "Everybody sees more money at Blue Cross and everybody hates Blue Cross, but yet they are the big tiger in the room."

Some recent contract impasses have reached resolution. In Maryland, CareFirst BCBS and Johns Hopkins Medicine would have been out of network with each other by December without a new contract. State lawmakers and Gov. Larry Hogan were outspoken about the need for the two organizations to resolve the dispute — CareFirst administers health coverage for around 97,000 state employees.

"Hundreds of thousands of Marylanders' insurance can't be in a tug of war between Johns Hopkins and CareFirst," Mr. Hogan told Maryland Matters in October.

Beyond the headlines of negotiation progress made or lost is where the real story is: Millions of patients around the country have or are unwillingly stuck in a corporate tug of war this year.

These developments occurred as hospitals and insurers face drastically different financial realities. The largest payers, UnitedHealth Group and Elevance Health, saw third quarter profits that were 28 percent and 7 percent higher than the same period last year, respectively. Molina's profits were up 60 percent and Cigna's were up 70 percent.

In contrast, hospitals and health systems have been seeing nothing but red. HCA's third quarter profits were down 50 percent and Tenet's down 70 percent. CHS lost $42 million in the third quarter, and Trinity Health has lost $1.4 billion over the last year.

Health insurers and health systems have long shared tension of varying intensity depending on the market landscape and competition, which can determine who is the contract taker, maker or breaker. In the day-to-day, 78 percent of hospitals as of Nov. 2 say their relationships with insurers are getting worse, and 95 percent are dedicating more staff resources to prior authorization approvals.

In these negotiations, insurers may still be haunted by the public consequences that can happen when rate disputes spill over to affect customers. In 2010, WellPoint (later rebranded as Anthem, and now Elevance Health) and then-CEO Angela Braly informed customers of drastic increases to their premiums. In California, subsidiary Anthem Blue Cross' premiums for individual insurance policies would rise 25 percent on average, with some rates swelling by as much as 39 percent. 

The primary driver of the premium hikes? The prices charged by physicians, hospitals, drug companies and other suppliers, according to Ms. Braly.

The raised premiums even led to a public spat with President Barack Obama, who said Americans were being "held hostage to an insurance industry that jacks up premiums and drops coverage as they please." Amid the heavy criticism, WellPoint backed away from the initially proposed premium hikes in March, rolling back rate increases for individual health insurance policies by an average of 14 percent and later noting that it regretted "inadvertent" errors in the initial filing. Ms. Braly resigned under investor pressure in 2012.

This March, CBS-affiliate WCIA reported that BCBS Illinois terminated its CEO, Steve Hamman, following news reports of the company overcharging members while decreasing provider options through its dispute with Springfield Clinic — however, BCBS never confirmed the termination.

Today, while the general public hardly sees either party as faultless, their trust in insurers falls well behind that of hospitals, government agencies and even pharmaceutical companies. In January 2021, 33 percent of adults polled nationwide said they completely or somewhat trusted health insurers compared to 72 percent for hospitals, according to a survey from nonpartisan NORC at the University of Chicago

It can be easy to criticize payers as they rake in large quarterly profits, but their contracts with providers typically arise every three to five years, meaning the financial woes of 2022 would not appear in earnings reports just yet. Insurers have the great privilege of adjusting premiums every year, but inflation, lower CMS star ratings and the loss of providers in their networks can eventually cut into profits — though that's little vindication for hospitals as they discuss where to cut window cleanings to stay afloat.

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