The relationship between health insurance companies and providers is inherently antagonistic, with health systems, hospitals and physicians looking to get paid for all the care they deliver and payers trying to reduce payments as much as they can. The push-and-pull over reimbursement is simply the nature of the healthcare ecosystem.
But given some of the recent and embarrassing news stories about insurers refusing to pay for care needed by seriously ill patients and the sky-high medical bills charged by providers, it's clear that we need to figure out a way to meet in the middle and develop solutions that both can live with.
To sustain our delivery system, the future of healthcare must include productive partnerships between providers and payers. Without increased cooperation, we'll continue to be adversaries and everyone, including patients, will suffer.
As any health system or hospital CEO can attest, we're seeing a rising prevalence of payment denials for medically necessary care — at Northwell Health, the average initial denial rate last year was 25 percent. More so than ever, large insurers are usurping physicians' decisions on how and where to treat patients by deeming certain procedures and/or hospital stays as medically unnecessary — and withholding payments for those services.
If you're a physician who went to medical school for four years, completed three to six years of a residency as well as a fellowship, you have more than a decade of training under your belt by the time you arrive at a hospital or clinical practice. All physicians rely on their education and clinical experience to assess patients' needs and determine what tests or treatment they require.
To have a some distant doctor or nurse who has never seen the patient look back and decide retrospectively what the optimal course of treatment should have been — based not upon the facts known at the time of care but upon an insurance company's algorithm — is insulting to the treating physician and the knowledge he or she spent years cultivating and ignores the patient who is being diagnosed and treated.
This troubling phenomenon came to light during recent revelations that a former medical director at Aetna never personally reviewed the medical records of patients when deciding whether to approve or deny their care. Instead, he testified that he made those decisions based on recommendations of nurses who reviewed the records for him. Based on his comments, no one at Aetna spoke to the attending physician or the patient who was denied care.
Contracts between insurance companies and health systems often stipulate that treating physicians are the ultimate decision-makers on care. However, in a strategy and practice that is clear, deliberate, costly and possibly illegal, big insurers often run roughshod over those agreements by overriding physician treatment decisions. For providers, the only recourse is to sue. When that happens, providers typically end up settling for a fraction of what they're owed. And while the settlements typically include promises by insurers that they'll stop their bad behavior, they usually revert back to business as usual shortly thereafter.
On the flip side, critics of healthcare providers argue that physicians often over-test and over-treat patients because it is in their financial interest. Certainly, there are many egregious examples of exorbitant billing, which often leaves patients on the hook for huge out-of-pocket costs. While there will always be some who abuse the system for their own gain, the vast majority of clinicians are honest, caring individuals who do the right thing for the right reason. To promote accountability, the onus is on hospitals and health systems to create effective monitoring protocols to avoid abuse. It is in providers' best financial interest to implement robust quality control measures because it lowers the chance of a claims denial, saves them money on the front end and enables best practices for the patients we serve.
Rightfully so, hospitals and health systems would never put patients at risk by denying them the care that their physicians believe they need, even though providers have found out the hard way that they may not get paid for the services they deliver.
One other recent development that further complicates the relationships between payers and providers is the hybrid model evolving across our industry. The traditional roles of providers and payers have changed over the years, with many major health systems now offering health plans and payers entering the treatment space with providers of their own. I believe the increasingly diffuse aims of payers and providers could actually help eliminate some of the inefficiencies in healthcare if leaders look at their overlapping market shares as opportunities for partnership — not competition.
Moving forward, providers and payers must tackle the claims issue in a realistic and collaborative way. At Northwell, for instance, we have an initiative underway with a major insurer to improve communication between clinicians and insurers at the point of care. Decreasing denial rates even a little would generate significant revenue for providers. Greater collaboration could also enable both sides to reduce their administrative costs. Large health systems employ literally several thousand people — coders, revenue cycle managers, claims specialists, financial analysts, etc. — whose overarching job is to help providers get paid what they're owed. Reducing those overhead costs would produce major savings.
If providers and payers don't resolve this tug-of-war on their own, politicians and regulators will end up getting involved, which would undoubtedly lead to increased regulation. I think both sides would agree that's not the answer. It would add more strings to an already complicated process and increase administrative burdens for everyone. For meaningful, productive change to occur, we need to better manage the care that's delivered and paid for, reduce costs to the extent possible and do what's right for our patients.