Payers

Payer-provider contract negotiations are getting nasty amid rising denials, expenses

Mercy Health, Trinity, and UF Health are the latest hospital systems to hit breaking points with insurers over contracts and reimbursement disputes.
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3 min read

It may be getting colder outside, but contract negotiations between insurers and payers are heating up.

The latest standoff? Some UnitedHealthcare customers have been out of network with University of Florida (UF) Health since their contract expired on September 1, though negotiations are ongoing, according to a UF Health press release.

This came after Livonia, Michigan-based Trinity Health—a not-for-profit system that has 101 hospitals and 126 continuing care locations nationwide—failed to reach a contract by its July 1 deadline with United in California, Indiana, and Georgia. Members were left out of network for most of July before an agreement occurred, Stat reported.

Contract negotiations for Trinity Health of New England stretched into mid-August, with the system alleging unfair reimbursement had “pushed” it to a “breaking point” in a statement on the Trinity-run site healthcomesfirst.org.

Show me the money. One of the sticking points in these high-stakes tug-of-wars is payment. Both payers and providers agree new contracts should pay more for services, but they disagree on how much.

United argued they have proposed “meaningful rate increases.” But UF disagreed in its release and pointed to low commercial payment rates, Medicaid managed care claim denials, and payment delays.

“All too often, when United preauthorizes a treatment plan and the UF Health care team provides care, United reverses course, unilaterally denying payment or taking other administrative action to avoid paying what was promised,” spokesperson Greg Harrison told Healthcare Brew.

A mounting problem. And it’s not just United. The American Hospital Association (AHA) has “increasingly” heard from health systems about “growing tension” over insurance companies amid care delays and denials, Michelle Millerick, director of health insurance and coverage policy at the AHA, said in an emailed statement to Healthcare Brew.

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A September AHA report found administrative costs now make up more than 40% of hospital total patient care expenses, and care denials increased 20.2% and 55.7% for commercial and Medicare Advantage claims, respectively, between 2022 and 2023.

“Some of these issues get to a boiling point where decisions are made to not participate in networks anymore—or where insurers refuse to contract with providers if they do not accept below-cost reimbursement rates or business terms that unfairly disadvantage them,” Millerick said.

Unhappy hospitals. The latest health system to draw a line in the sand is St. Louis-based Mercy, one of Missouri’s largest health systems.

On September 10, Mercy announced it plans to end all its contracts in the state with Anthem Blue Cross Blue Shield on January 1, a decision made after “months of negotiation with Anthem.”

Dave Thompson, Mercy’s SVP of population health and president of contracted revenue, said in a release that the system is willing to keep negotiating with the goal of reaching a contract before January 1, but care reimbursement would be a deciding factor in this standoff.

“The cost of providing actual care for patients has risen significantly due to inflation, but Anthem has not kept pace with those rising costs when it comes to reimbursing us for the care we provide to our communities,” Thompson said.

Anthem spokesperson Jeff Blunt, meanwhile, told Healthcare Brew that Mercy is proposing “drastic” price increases in comparison to Anthem’s “reasonable” ones.

Navigate the healthcare industry

Healthcare Brew covers pharmaceutical developments, health startups, the latest tech, and how it impacts hospitals and providers to keep administrators and providers informed.

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