Wow! Pretty drastic accusation, huh? What can be happening to rural hospitals that reaches the level of Scandal? Why would anyone accuse payers of “abusing rural hospitals? That’s pretty harsh, isn’t it? Well, you decide. What would you say if I told you that large-multi-billion dollar companies are intentionally withholding millions of dollars from rural hospitals? And the scandal is that rural hospitals are closing their doors at an alarming rate and are complicit in their own failure! Rural communities are being deprived of local healthcare, and hospitals of their hard-earned revenue while those who make, and keep the most money in the process just keeps turning the screws. There does not seem to be one insurance or managed care company interested in the long-term success of rural hospitals. If they were, their practices would change. Companies like Blue Cross Blue Shield, United Healthcare, Aetna, Cigna and hundreds of others insert a mind-numbing number of complicated, confusing, and intentionally cryptic components into their hospital contracts. But, here’s where we as hospitals are complicit. We sign these contracts—often without an attorney’s review, and then we forget them……… (crickets chirp)
And, every year that goes by the rich, (insurance companies) get richer and the poor, (rural hospitals) get poorer. Now, we do not deny a company the right to earn a fair paycheck, (although few things are fair about how rural hospitals are paid.) But, why should we make it easier for these super-profitable insurance companies to make more money when they already make BILLIONS?
United Healthcare’s Office in Minnesota
Let’s take a quick look at United Healthcare—well known for wringing every available penny out of every hospital with whom they contract. United Healthcare estimated its 2015 revenue at $143 Billion—a $2 Billion increase over last year. In 2014 Stephen J. Hemsley, CEO of United Health Care had accumulated compensation of **$133,955,076. Again, more power to Stephen—but not at the expense of struggling rural hospitals.
At the same time, one hospital system in Mississippi has been fighting for over 5 months with UHC over claims for services rendered for which they were paid $0. Everyone has agreed that the claims should have been paid, but still no action in 5 months. The hospital has been forced to terminate their agreement with UHC. But, I predict they will eventually return with their hat in their hand because UHC is 7% of that hospital’s business. (djournal.com; Oct. 5, 2016)
As I said earlier, we do not begrudge United Healthcare and others like it making money, and lots of it. But, should we as rural hospitals allow these companies to wantonly plunder what little revenue we have remaining so they can fatten up their CEOs and delight their stock holders? I don’t think so! OK, so how are we as rural hospitals going to stop being the victims of these nefarious scoundrels? We must review and re-negotiate our contracts every year. Neglecting these contracts continues to make us victims of their selfishness, and our own complacency—even as many of us hang by our last thread.
Neglected Payer Contracts. When was the last time your payer agreements were reviewed and re-negotiated? For many rural hospitals it may have been years ago. There are many reasons why rural hospitals have not performed this review. First, most hospital CEOs and CFOs sign a payer agreement and never think of it again. Second, they may not be sure how the process works—negotiating managed care contracts was not part of the health care curriculum.
Third, it is tedious and complicated and requires a commitment of time and effort. Finally, administration has many other fires to fight without creating more work for themselves. It is easier for these contracts to remain “out-of-sight and out-of-mind.” We’re earning some revenue—so why create more work. Why stir up another “hornet’s nest?”
You have to stir up the “hornet’s nest.” Every year that passes without a contract re-negotiation, your hospital’s earnings fall further and further behind the hospital “cost of living.” We call it the “cost of surviving!” It’s like “backwards compounding” you’re giving away more and more money every year—compounding the earnings of the insurance companies. There’s really no way to quantify what might have been lost.
It is not unusual to find that an agreement has not been re-negotiated in over ten years. Your hospital may be earning a decade old inpatient rate of $750 per day. If you had been adjusting your agreement annually at the long-term average healthcare inflation rate of *5.41% you would now be paid $1,204 per day—for the same stay. With ever-increasing financial pressures on rural hospitals, now more than ever it is time to maximize your revenue. The insurance companies don’t need more of your money. Stephen J. Hemsley has enough. Re-negotiating your agreements is a great place to start. Stop being a victim. Impact Healthcare Solutions is working to mitigate this problem for rural hospitals.
The Assessment Process
As this is a major part of the revenue cycle, Impact Healthcare Solutions includes this review in the course of our revenue cycle assessment. Recommendations will be made to administration as to the steps to repair your agreements. Here’s where we start: