Prescott eNews
May 29, 2024 7:35 PM

Hospitals’ Drive for More Money Leaves Patients Hanging – Inside Sources

Large hospital systems nationwide are adopting an alarming and dangerous tactic to force insurance companies to pay more when patients use employer insurance plans: proactively taking themselves out of network for Medicaid and Medicare Advantage patients, even though reimbursement rates for those plans are not in dispute.

This hardball tactic leaves society’s most vulnerable patients scrambling to find new, in-network providers and disrupts much-needed medical care.

Many patients may be inclined to blame insurance companies for the disruption; in reality, the issue is the providers — typically large hospital chains — squeezing employer insurance plans into significantly raising what they pay the same hospital systems for the same services at the expense of the poor and elderly. 

These hospitals put Medicare Advantage and Medicaid patients out of network, even months or years before an already-agreed contract with inflation-proofing provisions included is set to expire, to force employers into paying more. Early contract termination is even becoming a heavily marketed “negotiating tactic” pitched by consultants to hospital systems.

Brad Gingerich, a consultant who works with hospital chains to help them make more money from insurance companies, told USA Today last year that dropping insurance companies is a key strategy that hospital systems can, and should, use to force insurers to pay more.

“Sometimes you have to take more aggressive ways as a means to that end,” he said. Gingerich works for Ensemble Health Partners, which boasts that “two of our clients recently leveraged an out-of-network strategy that ultimately resulted in contract rates double the standard annual increase of two-to-three-percent for each year of their agreement. One of the organizations only went out of network for a matter of hours before settling on a higher rate with the payor. The other merely threatened to exit the network, leveraging social media and community news outlets to make their position public and put pressure on the payor to come to the table with more reasonable rates.”

It’s not clear who Ensemble’s clients are, but the tactic the company is marketing was used last year by a major health system in the Midwest and Mid-Atlantic regions. That dispute saw tens of thousands of vulnerable patients in both areas forced into medical limbo. It also saw a resolution that inevitably will mean higher prices for employer plans and the employees they cover. The tactic has been used on the Pacific Coast and in some Southern states.

If companies provide health insurance in these places, there’s a decent chance health insurance costs went up because of the hospital system’s hardball tactics — or the employee’s take-home pay did not increase as much as it otherwise could have. 

Ultimately, the public does not know how much the insurance plans in question had to increase what they pay hospitals to ensure the systems would not, in fact, leave the nation’s most vulnerable patients out in the cold. However, we know that the Midwest and Mid-Atlantic systems were reportedly seeking increases of something like three times the annual hospital inflation rate.

We also know that if this tactic continues, it will come to a state where there is sufficient market concentration in the hospital sector that insurers cannot meet coverage requirements unless they cut a deal with hospital systems that may be the only one, or one of two, operating in a given area. That’s where vulnerable patients could bear the brunt, short-term, until insurers cave, leaving employers and employees — whose plans are the real target — to bear all the additional cost.

Insurers have legal requirements about where they spend their money; when your premium or other costs go up, it’s not because the insurer is pocketing it — it’s because they’re having to pay providers more.

The bottom line: This problem will not abate soon; it is now nationwide, and patients must pay close attention. Insurers pay the bills, but they do so with patients’ and employers’ money, so when hospital systems use hardball tactics like these to extract higher rates, it’s your money on the line — not that of some nameless, faceless, money-printing corporate behemoth. We need insurance companies to say no to these hospitals. If the hospitals persist, we need Congress to step in and stop their abusive practices.


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