Adversaries and Partners – Can a Payer be Both?

Ok, I will admit that I am a glass-half-empty guy.

I would love to always see the positives in things, but someone has to be pessimistic and find the risks and dangers. And as a result, a lot of my segments and articles are criticisms. Of course, I consider all of my complaints as fully justified, but I am a bit biased.

And as you all know, much of my attention is often directed at insurance companies. I recently heard of one health system that was being paid rates significantly lower than Medicare rates from one payer for all their contracts – and despite that feeble payment rate, they also had over 25 percent of their claims denied. The system gave notice that they were going to go out of network, and the payer undertook a public relations blitz in the community about the greedy health system demanding a huge raise in rates – without ever mentioning the current payment rates or the denials.

I suspect that every one of you faces similar issues, perhaps less severe, from many payers with ambiguous ever-changing rules and constant battles to get paid for the care you provide.

But while the utilization review (UR), clinical documentation integrity, appeals, and revenue integrity teams are fighting the payer day in and day out to get paid, and are facing pressure from the C-suite to reduce denials, reduce observation stays, and increase the case mix index, in many health systems, the hospital’s population health teams are partnering with those same payers to develop value-based payment programs. These programs have many structures, but in most of them, the health system shares in savings when the overall cost of care is reduced. Imagine that – a common goal.

Now, I understand that there are many new models of care being developed, and perhaps the C-suite has to hedge their bets so they are not left behind, but it seems important to be transparent with the staff about that overall strategy. Telling the UR team to fight a payer more aggressively to get more inpatient admissions approved and get more denials overturned at the same time that the hospital’s value-based team is working hand in hand as partners with that same payer to maximize savings may be necessary in the current healthcare environment, but this does not seem to be an effective way to improve the morale of those handling the admission and clinical validation and readmission denials (and fighting the payer, day in and day out). 

It reminds me of the times when, at my hospital, we had patients who were stuck in the hospital without medical necessity. When I suggested transferring them to our hospital-owned nursing facility, I was rebuffed, because the patient had no payment source and it would adversely affect the facility’s financial statement. So instead of costing the hospital $500 a day at the nursing home, it was costing the hospital $1,500 a day keeping them in an inpatient bed. I am not an MBA, but I know that spending $1,500 a day is more costly than $500 a day.

So, does anyone ever look at the big picture? If the value-based arrangements are great and bring in tons of cash, let the UR and other staff stop aging prematurely from their brutal and frustrating fights with that same payer. Retailers all use the loss leader method of attracting customers: advertising a few items at a price below cost to get the customers in the door who will then buy other merchandise as well. Maybe health systems should start considering hospitalized patients as their loss leaders, giving away care to attract more value-based lives and money.

NOTE: The opinions expressed are those of the author and do not necessarily reflect the views, policies, or opinions of R1 RCM, Inc., R1 Physician Advisory Services (R1 PAS), or MedLearn Media.