Why insurers, health systems are breaking up

By Laura Dyrda for Becker’s Hospital Review

Insurers and health systems across the U.S. have been at odds during the most recent cycle of contract negotiations, and terminated contracts are affecting thousands of patients.

As hospitals continue to recover financially from the COVID-19 pandemic and deal with higher supply costs and employee wages, many organizations have tightening margins and hope to negotiate higher rates with insurers as a result. Hospitals are also pointing to rising inflation as a reason for needing higher rates.

One recent example is Fort Lauderdale, Fla.-based Broward Health’s public breakup with UnitedHealthcare. Thousands of the insurer’s beneficiaries went out of network with Broward April 1 after the two sides failed to agree on a new contract. Broward reportedly asked UnitedHealthcare for a pay increase to the same level UnitedHealthcare pays other South Florida health systems.

UnitedHealthcare said Broward’s rate increase request would amount to 88 percent higher reimbursement for its providers in the next four years, which the insurer said was “unreasonable.” Negotiations continue, but patients are out of network in the meantime.

Blue Cross & Blue Shield of Mississippi and the University of Mississippi Medical Center let their contract expire April 1 after they failed to agree on pay rate increases, according to the Clarion Ledger. The medical center treated more than 50,000 patients in the 18 months before the contract expiration.

LouAnn Woodward, MD, vice chancellor for health affairs and dean of the medical center’s school of medicine, said the health system wants “fair reimbursement” from Blue Cross & Blue Shield to reinvest in its facilities and programs. The insurer said the medical center wanted a 30 percent overall rate increase, including a 50 percent increase for some services, according to the newspaper report.

Physician groups and surgery centers aren’t immune from insurer conflicts. Blue Cross Blue Shield of Illinois terminated its contract with Springfield (Ill.) Clinic late last year, knocking 100,000 beneficiaries out of network.