Hospitals negotiate with insurance companies to secure fair reimbursement rates, with the results having an immediate effect on how easily you are able to access healthcare in Dayton.
Hospitals now enjoy more negotiating power than ever thanks to a new federal rule requiring them to disclose prices for 70 common routine services.
Cost-effectiveness
Hospitals now have an additional weapon against insurance companies: purse power. According to a new study, researchers discovered that hospitals use this bargaining power to extract higher prices from insurance plans and patients by raising service costs, passing on this increase through premium increases or out-of-pocket expenses for members. For this assessment they conducted semistructured interviews with individuals from hospitals, health plans, market analysts and knowledgeable market observers in 12 markets spanning multiple market types and conducting an empirical assessment of price setting/negotiating leverage across those 12 markets.
Researchers discovered that hospitals’ negotiating leverage has increased after years of decline, due to various factors including changes in policy and purchasing context, managed care plan markets, hospital markets and serious contract disputes that can result in the exclusion of hospitals from networks or channels and the shifting of large volumes of patients elsewhere.
They found that hospitals charged HIX enrollees a price typically less than what they charge commercial groups but more than what was charged for MA enrollments, suggesting that local market variations regarding pricing for both public option programs such as HIXs should be taken into consideration as policies are developed to expand access.
Some hospitals have begun publishing cash prices for some services, yet this information can be difficult to locate and is usually presented in hard-to-use formats intended for data scientists and professional researchers. Even when found, however, it’s often impossible to determine exactly what payment rate applies since some hospitals neglect to post their prices publicly.
One of the main challenges in health policy is quantifying benefits, particularly subjective or intangible ones such as quality-adjusted life years (QALYs). Cost-effectiveness analysis addresses this challenge by comparing costs and benefits of different courses of action; though cost-effectiveness analyses have been criticized for being uncertain in their results, researchers are developing methods for dealing with this uncertainty systematicaly.
Reimbursement rates
Negotiations of reimbursement rates between hospitals and insurance companies has an enormous effect on patient costs. Medical practices can improve their negotiating leverage by showing evidence of cost control and refraining from the use of expensive ancillary services, and by positioning themselves as industry leaders within particular fields to gain bargaining power with payers and gain higher payment rates and more flexible contract terms.
Hospital-insurance markets have undergone profound change over the last several years, as hospitals become more likely and able to exert their market power during plan-hospital negotiations. This trend will only intensify as health care industries move toward value-based payments and place greater importance on quality care delivery; consequently, medical practices must stay informed of this shift and create strategies to increase their negotiating leverage.
Employers and purchasing groups used managed care plans as a tool to increase hospital competition and lower health care costs, using selective contracting and utilization management techniques. Unfortunately, these tactics weakened hospital market power while increasing their reliance on plan-negotiated prices as the measure of financial outcomes.
Numerous insurers are beginning to leverage their market power to negotiate higher-than-competitive prices with hospitals, leading to price variation not usually seen within competitive markets, according to Becker’s Hospital Review. As a result, workers experience higher premiums, which have since skyrocketed across the nation.
A New York Times investigation exposed how private insurer prices paid by them for basic hospital services vary dramatically within cities, even within a single metro region. Partnering with two University of Maryland researchers, they created a database compiled of hospital negotiated rate files at 60 major hospitals displaying costs related to specific services at these hospitals – not necessarily showing which insurer gets better or worse prices, but instead showing hospital negotiation power has grown since 1996.
Contract terms
Hospitals frequently enter into contracts with private health insurers that pay a significant part of their patients’ care, to lay out how their services and prices will be provided to insureds. While most agreements are conducted behind closed doors, others are transparently managed publicly – either way this secrecy poses problems for consumers as there’s no way of knowing exactly what rates will be charged before visiting a doctor or receiving surgery; many insured patients end up paying surprising unfavorable rates.
Melnick et al. 1992) identified several factors that influence plan-hospital contracting, including hospital market power and plans’ shift of risk onto providers (Melnick et al. 1992). Our recent, longitudinal study examined these forces in 12 nationally representative markets over time using descriptive quantitative data as well as semistructured interviews conducted with both plans and hospitals. Unlike previous research efforts, ours is the first that provides a holistic account of contracting dynamics with both plans and hospitals involved.
Over the last two years, hospital market power has increased substantially across many of our CTS markets. Hospitals in seven of them became “contract makers and breakers” rather than passive “takers”, actively engaging in negotiations with plans demanding price increases up to three times greater than their cash prices as well as seeking other favorable terms within contracts; even terminating them if they couldn’t secure price increases they wanted – potentially disrupting patient access in some instances.
Contrarily to these aggressive negotiations, other hospitals in our sample remained “takers” and continued to experience financial challenges. Many had low or declining margins or losses as reimbursement rates from private insurers declined and costs for uninsured patients rose. This situation caused mounting financial distress as well as opportunities that lead some hospitals to test their market power with managed care plans.
Overall, these two types of hospitals utilize various strategies for adapting to an ever-shifting health care landscape. Our analysis indicates that private purchasers, such as employers and purchasing groups, should consider developing various options to reduce the impact of hospitals’ increasing market power in negotiations with them.
Patient access
Patient Access (PA) is the gateway between patient and provider and revenue cycle management in healthcare, performing an essential function. PA encompasses everything from scheduling appointments, gathering patient demographics and verification information for insurance verification as well as financial clearance – with effective procedures eliminating rework downstream while improving patient financial experiences. Unfortunately, many practices struggle to achieve the necessary accuracy of PA procedures which could result in pre-cert denials, claim rejections and returned statements that threaten operational margins significantly.
While hospital leaders recognize the significance of improving patient access, they often struggle to access resources and technology required to implement best-practices. This problem is further compounded by patients being empowered to manage their own healthcare through online review sites or other tools.
Hospitals must adapt to this shifting landscape by prioritizing patient access rights and adopting advanced technologies that offer optimal results. Focusing on finding access solutions that maximize profitability while increasing customer satisfaction can ensure long-term success and ensure long-term viability for service providers.
Automating workflows and providing customized, personalized service experiences are also possible with these applications. This is important, as it allows patients to make better informed decisions regarding the treatments they require while also giving them more control of their care.
Another effective strategy for improving patient access is removing barriers to treatment. More patients than ever before are choosing care outside traditional hospital settings such as retail clinics, microhospitals, freestanding emergency departments and other emerging treatment facilities – even using self-directed options such as telemedicine and remote diagnostic testing services to get access to care.
Finally, hospitals can address patient access issues by making their prices clear for consumers. To do this effectively, hospitals must develop accurate price estimates that reflect both actual costs associated with providing services as well as their negotiated payment rate – this may prove challenging given that pricing can fluctuate often with changing insurance and reimbursement policies.
An effective first step should be asking patients about their financial responsibilities and making sure they understand all charges for any procedure they undergo. This allows the practice to collect any upfront payments such as copayments or deductibles that might be due, optimize its revenue capture capabilities and maintain its financial health. Hospitals should also develop policies providing financial aid for patients who can’t afford the cost of procedures.
