What will 2015 bring in healthcare? Judith Roman, CEO of the managed care company Ameri-Health, together with several other prominent healthcare executives, predict that 2015 will bring further consolidation of healthcare organizations as hospitals struggle to remain financially sustainable. Further predictions indicate that the alignment of incentives between payers and providers will grow more critical. While consolidation brings more financial stability, it allows hospitals to gain more market power and set higher prices since there are fewer options for patients seeking care. Nowhere is this as clear as in Pittsburgh and New York, where a fight for healthcare choices is very much playing out. In both locations, there are many consumers that will now (as of January 1, 2015) have to choose between paying hefty out of pocket costs or switching primary care physicians.
Pittsburgh is one of the most contentious and competitive health insurance markets in the country that is dominated by both a longstanding insurance monopoly, Highmark and a highly consolidated provider market. The University of Pittsburgh Medical Center (UPMC), the largest of these providers, has recently tried to use this market power to negotiate higher rates with Highmark and drive consumers to its insurance product, the UPMC Health Plan, by eliminating in-network access to UPMC physicians for many Highmark customers, translating into greater costs for Highmark patients seeking care at UPMC.
Similarly, in the New York metro area, with so many large hospital centers within close proximity to each other and some hospitals losing money, hospitals are negotiating higher reimbursement charges from insurers that some are choosing to drop coverage for certain providers and create a smaller more limited network of providers in order to save money.
As the situations in these local markets play out, states have stepped in to mitigate the effects of consolidation on customer’s physician access. While there are now signs that remaining Highmark customers may see some relief, the battle between Highmark, a large insurance company with an integrated hospital system, and UPMC, a large hospital system with an integrated health plan, is not over. Pennsylvania state officials have worked to allow UPMC patients to seek continuity of care for the 2015 year without having to pay out of network rates as long as the patient sought care from that provider at least once in the prior year. But mediation to formally resolve the dispute between the UPMC and Highmark are ongoing.
In New York, the state legislature passed a new law, effective April 1, 2015, to ensure that all insurers 1) have adequate networks to support all necessary medical care and 2) provide full disclosure of which providers are in network as well as the payment rate for any out-of-network services that are received. The law is aimed to ensure payment for any care received in an emergency and for medically necessary care when there is no adequate provider in network to treat that patient, such as the absence of a cardiologist to treat a patient with heart disease.
The outcome of the plans being implemented in New York and Pittsburgh are quite similar: despite battles brought on by consolidation, patients can continue to seek care from their choice of providers and are made aware of any additional charges that may result after a grace period. The approaches in New York and Pittsburgh both show a willingness to provide patients more flexibility in choosing their own care while at the same time maintaining access to allow patients to choose within a greater network of providers, despite consolidation trends.
With health insurers buying up provider organizations in a flurry of aggregation, it is critical to align the interests of the insurer and provider organizations so that doctors are not finding themselves in the middle of a patient-insurer conflict over networks and costs. For delivery system reform to succeed patients must be able to maintain relationships with their chosen providers and providers must be willing and able to participate in networks. All of this means that in 2015, we can expect to see more consolidation of healthcare organizations, more partnerships between providers and payers, as well as new changes to reduce out of network care costs.
Daniel B. Shulkin is a Masters of Public Administration Candidate in Health Policy and Management and Health Economics, Finance and Outcomes Research Fellow at Greater New York Hospital Association (GNYHA).
Disclaimer: The opinions expressed in this op-ed belong solely to the author and does not reflect the views of GNYHA