Health systems are taking a tougher stance with commercial payers, arguing that they are not being adequately reimbursed for services provided to patients, and some providers have gone out of network if contract renewal offers have not been up to par.
Many hospitals and health systems have reported increased earnings in 2023, but such improvements continue to be partially offset by the ongoing effect of salary and supply cost inflation, which exceeds payer reimbursement rate increases.
CommonSpirit, a 140-hospital system headquartered in Chicago, is taking a tougher stance on contract renewals "so payers absorb a share of inflation," and the strategy appears to have paid off after its recent negotiations with Anthem Blue Cross Blue Shield of Colorado.
Eleven of CommonSpirit's hospitals in Colorado went out-of-network with Anthem BCBS for more than two weeks after the health system rejected various offers that "failed to offer terms that fairly reimburse" for services provided.
CommonSpirit and Anthem BCBS on May 17 reached a five-year agreement, which is retroactive to May 1, when the previous contract expired. The agreement covers commercial, Medicare Advantage and individual plans. More than 40,000 CommonSpirit patients in Colorado have Anthem BCBS plans.
"Our patients are at the heart of all we do, and through our partnership with Anthem, we will ensure our patients continue to receive compassionate care from the doctors and nurses they know and trust," Andrew Gaasch, executive vice president and CFO of CommonSpirit's Mountain Region, said in a May 20 news release. "Our goal has always been to ensure we can meet the needs of our patients while continuing to provide essential services to our communities today and into the future."
Granted, large health systems like CommonSpirit will hold more weight at the negotiation table with payers given their size and scope, but smaller hospitals and health systems are also taking similar approaches in other parts of the country.
"We have a very comprehensive payer strategy and last year we went out of network with one of the big payers in the state," Bill Pack, CFO of Conway (Ark.) Regional Health System, said during a panel at the Becker's 14th Annual Meeting. "We were the first and since then four other large systems in the state have gone out of network as well."
One area that has become an increasing pain point for health systems is getting paid appropriately for care provided through Medicare Advantage programs.
"We're having real issues with some of our Medicare Advantage programs, where we have contracts in place to pay us one rate and they're paying us a rate much less than that," CFO Dan Morissette said during the health system's Feb. 29 investor call. "Denials that are absolutely not in accordance with the contracts that we have, delayed payments where we need to go to arbitration and/or litigation to try to get paid for work that we're clearly entitled to."
A growing number of hospitals and health systems across the U.S. are pushing back and dropping some or all MA contracts with certain commercial payers.
North Platte, Neb.-based Great Plains Health is the latest health system that will stop contracting with Medicare Advantage plans in 2025. The 116-bed acute-care regional medical center serves patients across western and central Nebraska, northern Kansas and southern South Dakota.
Effective Jan. 1, the Great Plains Health Innovation Network, which includes the system's clinics and independent practices, will drop Centene's Wellcare, Blue Cross Blue Shield and UnitedHealthcare plans. It encouraged patients to opt for traditional Medicare in 2025 to continue receiving care from Great Plains Health providers.
"To put the patient first, we can no longer be under contract with a plan that causes significant delays in care, longer hospital stays and outright denials of care," Narayana Koduri, MD, Great Plains Health's chief medical officer, said in a May 16 news release. "Medicare Advantage as it currently exists limits access to care in the region, as Medicare Advantage patients often have longer hospital stays as they await pre-authorization for post-acute services, which, in turn, limits bed availability for patients who truly need access to acute hospital care."