Wayne S. DeVeydt, WellPoint’s executive vice president and CFO, said some hospitals are seeking rate increases of as much as 50 percent, according to a report by the Wall Street Journal Health Blog.
In the past, dropping a recalcitrant hospital from the insurer’s network was difficult because of pushback from employers, but Mr. DeVeydt said employers have become more willing to consider dropping a hospital as long as there a viable competitor to take over the added volume.
And if a hospital complains to a state regulator that the insurer is not providing an adequate network, Mr. DeVeydt said employers are more likely to support WellPoint’s position.
He added that employers are also more willing to accept cost-saving tactics such as pre-authorization requirements in areas such as imaging.
UnitedHealthcare in a negotiations stand-off in New York
One sign of insurers’ tougher mood is a negotiations stand-off between UnitedHealthcare, the nation’s largest health insurer, and Continuum Health Partners, a five-hospital network in New York, over a new contract must be in place by March 1.
United said Continuum wanted a 40 percent rate increase while Continuum said United wanted a 7-10 percent cut, but added that negotiations had narrowed the gap. According to a recent article in the New York Times‘, the standoff signals an even more powerful push by insurers to control costs.
In an unusual move, United has sent letters to 1,300 physicians who have privileges only at Continuum hospitals, informing them they would be terminated from United’s networks if Continuum does not sign a new contract.
“United has been using the doctors as leverage,” says Ruth Levin, senior vice president for managed care at Continuum. “United is building fear among the doctors that they would lose a large portion of their patient base if Continuum did not agree to its demands.”
Ms. Levin says Continuum has taken United to court to stop the terminations of its physician, and a judge put a restraining order on those terminations while the case is being decided.
Craig Becker, president of the Tennessee Hospital Association, says he is not sure insurers are getting tougher but they continue to find ways to reduce payments. For example, payors have been retroactively reducing hospital admissions to 24-hour “observation” status, which pays less than a full admission. Hospitals then have to file an internal appeal to get the decision overturned, he says.
Read the Wall Street Journal Health Blog’s report on WellPoint.
Read “7 Managed Care Contracting Best Practices From Industry Experts” for tips on improving managed care contracting negotiations.
