By: Health Insurance
Submitted: 2009-10-19 09:31:28 | Word Count: 606
The stalemate between Bristol Hospital and Anthem Blue Cross and Blue Shield isn’t unique.
“Hospitals have reached the point where they just can’t accept a contract,” said Laurence Tanner, president of the Hospital of Central Connecticut in New Britain. Tanner said his hospital, Bristol, has had to “go to the wall” with insurance companies over rates.
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This week, Bristol Hospital announced it had terminated its relationship with Anthem — which accounts for nearly 20 percent of Bristol Hospital’s business — because the two sides couldn’t reach an agreement on rates for services.
“It’s a battle that’s gone on forever and will go on forever unless the system changes,” said Vin Capece, chief operating officer of Middlesex Hospital in Middletown, who had his own battle with the insurer last spring.The Middletown hospital and Anthem — an insurer that Capece said held 50 percent of the Middlesex commercial insurance business — were “very far apart” on how much of a rate increase was warranted.
“We put our cards on the table and said, this is what we need,” said Capece, but the insurance company wouldn’t budge. The contract expired, and the two sides negotiated for awhile before the talks broke down.
After a month of silence — when the community put pressure on the two sides to reach an agreement — they compromised in a two-year contract.
“I suspect the next time we’re going to go at it, it’s going to be just as difficult,” Capece said.
Tanner said it’s not uncommon to see friction between the providers and the payers.
Because hospital profit margins are “infinitesimal,” said Tanner, “we’re actually on suicide watch.”
The state’s hospitals “play Robin Hood,” when they charge those who have insurance more for the same services, he said.
During his battle with Anthem, Capece said, many people called the hospital, wanting to understand and offering to help. They were generally sympathetic toward the hospital, he said, but a big public fight really isn’t good for anyone.
But sometimes a hospital has no choice, said Capece. It needs to get its “fair share” from insurance companies to make up for inadequate reimbursement rates from government programs such as Medicare and Medicaid, he said.
The best possible outcomes with those programs, according to Capece, is to break even, but hospitals have a tough time doing that when Medicaid reimbursement is 70 cents for each dollar it costs to treat a patient.
Tanner said government reimbursement rates are worse in this state than in nearly any other state.
But that’s a lot compared to what hospitals generally collect from people they treat who have no insurance or governmental program at all. Usually, those patients can’t pay at all, and the cost is written off as bad debt.
“The only way we can make that up is to get a premium on the rate that we get from the commercial insurance companies,” said Capece.
Hospital officials said anti-trust rules prohibit them from discussing specific rates that insurance companies pay, which makes comparisons difficult and, hospitals say, gives insurers an advantage because they do know the various rates.
