When Negotiations Break Down in a Near-Broken Healthcare System

As FierceHealthCare reported a few days ago, an emergency physicians group which staffs and manages two Emergency Departments outside Philadelphia has failed to come to an agreement on reimbursement rates with the region’s largest health insurer, Blue Cross. That won’t mean that people insured by Blue Cross will stop coming to the ER, of course. But it does mean those patients will now be stuck with paying their own ER bills.

This of course will come as a surprise to those patients. But it also may come as a surprise to most of the general public that such negotiations happen in the first place. When a group like ours, or the one in Philadelphia, Abington Emergency Physicians Associates, first assumes management over an Emergency Department, it engages in negotiations with the regional insurers on what they will charge the insurance company for each of the services provided in the emergency room. It is well-known that the result of those negotiations often has less to do with how much a service actually costs to provide, but rather with the market clout of each of the two negotiating parties.

In these negotiations, Blue Cross is known as the 800-pound gorilla. Their size allows them to throw around their influence, often demanding reimbursement rates far lower than is acceptable for the hospital or the physicians group. Negotiations break down when the group and the hospital decide it is better to charge the services directly to patients (becoming ‘non participating’ where it is possible to be reimbursed 50-100% higher than a contracted rate) rather than accept the lower rates of the insurance company. This is not ideal for anyone involved, not the least of whom are the patients, who end up caught in the middle of an all but broken system.

The type of break down that happened between the Abington group and Blue Cross is pretty common, unfortunately. Big insurance companies use their near-monopolistic standing in the market to push around community hospitals and physicians groups. When this happens, it is important for the hospital and the physicians group to have a strong partnership.

It’s also incumbent upon the physician group to demonstrate that they are paying attention to important value points such as reviewing utilization of high cost tests to lower cost of care, tracking quality markers to insure the highest quality of care is being delivered and attention to satisfaction as patients are evaluated and treated. High performing groups do this and collect this data to demonstrate the kind of care that is being provided.

We always strive to be an exceptional partner to the hospitals we serve, but that isn’t always the case. Many emergency physicians groups prefer that a hospital essentially leave them alone to run the Emergency Department. We take a different approach, which is to work in close partnership and see ourselves as a resource to help the hospital provide more efficient, better care at all levels. Being on the same page with the hospital also aids in negotiations with insurance companies. The insurance company is less likely to try to push around the physicians when it knows the hospital will support them in walking out on the negotiations all together.

Ultimately, if the hospital and the physicians group are working together, it means less chance that the near-monopolies enjoyed by many of the big insurance companies won’t lead to undue abuse of the system.