Should the state set new rules for hospital-insurer contract disputes?
Hartford HealthCare and UnitedHealthcare reached a last-minute deal this week that kept the hospital chain from dropping out of the insurer’s network — the latest in a series of public contract disputes between hospitals and insurance companies.
Some state officials want to do something about them.
“Both the hospitals and the insurers have engaged in brinksmanship and put patient health at risk,” Senate President Pro Tem Martin M. Looney, D-New Haven, said in testimony last month on a proposal to make the contract disputes subject to binding arbitration. “This is an unacceptable situation for patients.”
In nearly all contract disputes between hospitals and insurers, the two sides reach agreements before the deadline and don’t end up severing ties. But state Healthcare Advocate Victoria Veltri said the uncertainty in the weeks leading up to an agreement can create fear for patients worried about whether they’ll have to switch health care providers or pay higher out-of-network rates for care.
And the stakes in negotiations are rising, Veltri said, as hospitals join larger chains and acquire physician practices. A contract dispute between Hartford HealthCare and Anthem Blue Cross and Blue Shield last year, for example, pitted the state’s largest hospital chain against the largest insurer. (The deal was settled after Hartford HealthCare’s five hospitals briefly left Anthem’s network.)
“Clearly the parties have proven they can work out their differences,” Veltri said. “It’s just can they do it in a fashion that doesn’t create mass panic, that holds the consumers harmless and gets them working on these things with a very big time period built in so they don’t have to keep resorting to last-minute agreements?”
While Looney favors binding arbitration for hospital-insurer network disputes, Veltri and state Comptroller Kevin Lembo — the former state healthcare advocate — prefer a mandatory “cooling-off period,” requiring those that can’t reach a deal to abide by the old contract terms for 60 days so patients have more time before the hospital goes out of the insurer’s network.
Both the hospital and insurance industries oppose the proposals, arguing that they would be likely to prolong contract negotiations, rather than make things better for consumers.
“Our concern is if you start in some way to put your thumb on the scale in what are fundamentally business negotiations, you will disrupt negotiations and therefore, in all likelihood, lengthen the process and potentially end up not achieving what you wanted to vis-a-vis consumers,” said Keith Stover, a lobbyist for the Connecticut Association of Health Plans.
More tough negotiations, more patient anxiety
Hospital and insurance industry officials say contract negotiations have gotten more complex in recent years because the way health care is delivered and paid for is changing. Instead of simply bargaining about payment rates, the discussions now often involve trying to determine how to measure the quality of care patients receive and how to tie it to compensation.
Designing those systems requires a different type of relationship between insurers and hospitals, and requires building trust between two sides that haven’t always had it, said Dr. James Cardon, executive vice president and chief clinical integration officer for Hartford HealthCare, the parent company of Hartford, Backus and Windham hospitals, MidState Medical Center and The Hospital of Central Connecticut.
Cardon is a cardiologist who is well aware of the anxiety patients feel at the prospect of their hospital’s going out of their insurer’s network. “It’s heart-wrenching,” he said.
But often in negotiations, Cardon said, a deadline can bring clarity.
“The question is how do we solve the…uncertainty for patients, which they certainly should not have to experience, [and] at the same time get this thing done?” he said.
Both the Office of the Healthcare Advocate and Connecticut Insurance Department tend to get an uptick in calls whenever a notice about a potential contract termination goes out.
Some people file complaints asking the insurance department to intercede, although Kathy Walsh, principal examiner in the department’s consumer affairs division, said the agency isn’t in a position to do so.
“We do try to inform members that the vast majority of these situations are definitely resolved before the end of the contract,” Walsh said. “It is the nature of negotiations that a lot of negotiations really do come down to the wire.”
Veltri said her office tends to get two types of calls in response to contract disputes. There are people with general questions about what any changes could mean for them. And others call with specific issues, such as a patient with surgery scheduled or someone with a complex health condition who worries about losing access to the doctor who understands it.
Patients typically receive notices if the two sides haven’t reached a deal within 30 days of a contract’s expiring. If they end up severing ties, insurance companies allow patients receiving ongoing care — such as those receiving chemotherapy, people scheduled for non-elective surgery, or women in the third trimester of pregnancy — to continue seeing the same provider, although it requires going through an approval process.
Neither of those are required by state law. Instead, the insurance department has set standards requiring insurers to provide notice to patients and allow for patients in certain circumstances to continue treatment, Walsh said.
Cardon said different insurers have different requirements for handling ongoing care, and said Hartford HealthCare would support changes to create a more consistent set of responsibilities for both insurers and hospitals if they sever network ties.
Would arbitration, cooling-off periods change things?
Looney’s proposal, which passed the Public Health Committee 19 to 8, would create a binding arbitration process for contract disputes between hospitals and insurers that involve network participation. Either side could submit to binding arbitration, giving the arbitrator authority to choose between each side’s proposals on any unresolved issue. If neither side chooses to go to arbitration by 90 days before the contract expires, the contract would automatically be extended for another year. After that first one-year extension, either side would be allowed to terminate the contract as long as they provide six months’ notice.
Looney described binding arbitration as the best way to guarantee that a deal gets done, noting its history of use for public employee contracts.
A separate bill, which didn’t make it out of committee, would have required both sides to abide by a terminated contract for at least 60 days, then negotiate for up to 30 days beyond that. New York and New Jersey both require similar “cooling-off” periods.
Lembo, in written testimony, said the 30 days’ notice patients now have isn’t enough to transition care to another hospital or provider if necessary.
The Connecticut Hospital Association called both proposals well-intentioned, but said they most likely wouldn’t have the intended effect. Instead, the association said in testimony, they would probably just push forward the termination date by 60 or 90 days without significantly changing the effect on patients.
And the association said parties need the ability to terminate contracts if necessary.
“Business negotiations are not always the most beautiful things in the world to watch, any more than, for example, the legislative process is a beautiful thing to watch,” Stover said.
But, he added, it’s the system that exists, and parties acting in good faith tend to reach agreements.
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