At a recent Empire BlueCross BlueShield broker advisory panel meeting, I was both enlightened and surprised to learn that the in-network status of some hospitals and their systems may drastically change in the foreseeable future.
We have all lived through the negotiation process of the big bad insurance company informing the public that a certain hospital’s status was changing to non-participating based on the egregious demands of the hospital for higher fees upon contract renewal. Then the hospital strikes back – leveraging employers, other plan sponsors and the public to push back on the insurer. Ultimately, the negotiations go down to the wire and miraculously an agreement is reached. Hospital gets their increase (not as much as they wanted) and the payors pass along or absorb the costs.
What’s happening for the first time is that the plan sponsor community is now siding with many of the insurers in these disputes, resulting in approval for carriers to be combative in their negotiations and potentially remove a hospital system from their network.
The folks at BlueCross BlueShield (BCBS) were going to allow NY Presbyterian, a vaunted NY system, to walk in their most recent dispute. The massive Hartford HealthCare system in Connecticut was removed by Anthem (Empire’s parent) for almost a year in 2017/18. The message: plan sponsors cannot and will not stomach continuous cost increases related to unit cost enhancement. Plan sponsors want and are demanding demonstrated value as we shift into a new era of provider payment reform (written about in previous posts here, here and here). Large labor organizations, most using BCBS, are for the first time pushing on them to hold the line and willing to live with the results.
There will be a day in the not-too-distant future when insurers will not have every system participating in their networks. “High efficient” networks that do not have every system have been around for some time now and are gaining new traction with the use of plan design steerage to these providers. The providers don’t like it, but they may have no choice.
Credit the hospital systems in the Northeast with massive consolidation to maintain their leverage. Lessons learned from California’s almost overnight bloodletting that saw numerous facilities close as consolidation took hold behind the curve.
The hospitals are deeply entrenched, but they are going to have to find another way to work with their constituents to manage costs or they will see their world change drastically.