Financially, it was a difficult time to be a hospital.
Health systems across the country are squeezed by flat or stagnant income, and at the annual HFMA conference in Denver last month, USC Keck Medical CEO Rod Hanners noted that its costs, especially for labor and supplies, continue to rise.
The ongoing reimbursement challenges at the hospital make this worse, Hannas said, which is largely attributed to payer refusal, delays in advance authorization and complex claims procedures.
He noted that payers often seized on technology to refuse payments, thus frequently conducting arbitration. Even if the hospital ends up winning arbitration cases most of the time, this usually only results in partial reimbursement, and legal fees further reduce payments.
“I think you're going to receive the overall feeling of most providers that the payer will look for any possible reason not to pay. If you give them an opening remark, you won't be paid. So when you do arbitration, the arbitrators are going to make everyone happy, so they'll basically give you 75 cents, so they'll give you 75 cents so that you can regain those services as you expect.
Hanners added that all this bureaucratic friction not only burdens but also delays or disrupts the care of patients.
Even if the patient is diagnosed as Dr. Keck and received a treatment plan, the patient is usually captured in authorized denial and redirection for up to several weeks. Hannas noted that this can cause confusion and disrupt the continuity of care.
He noted that many health system leaders (including himself) tried to understand where the payers came from and wanted to work together to address these issues.
“We tend to work with payers. When I talk to leaders of large payer groups, they understand the problem and are perfect for change, but that doesn't seem to reach people who handle claims day after day. There's some disconnected connections there,” Hanners said. ”
He said cost cuts have long been a top priority for health system leaders, but the urgency is now sharper.
As he continued to look for ways to control costs in his health system, one thing Hannas found particularly problematic is that the affordability of the California healthcare office has increased the hospital’s reimbursement rate to 3.5%, even as hospital expenses climb 5-6% per year.
Hannas declared: “The equation does not work.”
He noted that Massachusetts restricted hospital reimbursement rates increased a decade ago with the aim of reducing health care costs, especially employers’ insurance premiums.
Hannas said policy changes never achieved this expected goal.
“One executive I know of did a study on the Massachusetts program, and while it does have the effect of reducing rates to increase hospitals, when you look at what your real results should be, and that’s the lower premium for the health plan – no manifestation. Employers’ premium levels have not changed, but hospital losses have been reduced.
He questioned why legislative cost control efforts tend to focus primarily on providers rather than more profitable players in the healthcare sector, such as drugmakers, payers, PBMs and suppliers.
Hanners urges policy makers to study the profits of these companies more comfortable than just squeezing providers.
Photo: Julia_sudnitskaya, Getty Images
