The payer relationship: Reimbursement, leverage and patients in the middle

The most pointed stretch of the conversation. Bhatt's pulsed field ablation example shows a better procedure that pays less, Beiner and Garrett describe margins thinned by H.R. 1 and outdated regulation, and the panel turns to the payer fights that leave patients caught in the middle, including Garrett's account of notification letters that interrupted hundreds of patients mid-treatment.

Chief Healthcare Executive held a roundtable discussion with healthcare leaders talking about the most pressing problems in the industry, and how they are tackling those issues. In this installment, our panel talks about the relationship between health systems and payers, reimbursement pressures, and the patients who are caught in the middle.

The participants:

• Robert Garrett, FACHE — CEO, Hackensack Meridian Health
• Benjamin P. Levy, M.D. — clinical director of medical oncology, Johns Hopkins Sidney Kimmel Cancer Center
• Deepak L. Bhatt, M.D., M.P.H., M.B.A. — director, Mount Sinai Fuster Heart Hospital, Icahn School of Medicine
• Kevin Beiner — COO, Northwell Health
• Stephanie Wierwille — moderator; EVP, strategy and innovation, BPD

Stephanie Wierwille

“I'll ask the group: how is the reimbursement landscape shifting, and specifically, how is the payer relationship changing what health systems can invest in? We need to be reimbursed appropriately to make the investments and changes we've been talking about. Anyone who wants to jump in on what you're seeing and how it might be shifting what's possible.

Deepak Bhatt, M.D.

“Let me jump in with a concrete example. There's a lot of innovation in medicine, and in the cardiovascular space the pace of change has been incredible. One advance is in the treatment of atrial fibrillation, the most common heart rhythm disturbance as people get older. Alcohol and obesity contribute to it, but it's very common with age. One procedural therapy that has emerged is atrial fibrillation ablation, an effective way to treat it and get symptoms under control, especially for people who don't want to be on, or don't tolerate, medicines. A very recent advance is what's called pulsed field ablation, and without getting into the technical aspects, it allows the procedure to be done more quickly, with results that seem to be at least as good as the historical standard. From the patient's perspective, a quicker procedure, maybe same-day discharge, is a plus. Even from an electrophysiology lab perspective, there's potential for greater patient throughput.

“The problem, in the context of our discussion, is that the reimbursement for it is far less than the prior procedures. You've got a procedure that's actually better, but a hospital is going to make less money as it gets adopted. There's the argument that you'll be able to do more procedures and the throughput will make up for it, but it doesn't usually work out one-to-one, because the reimbursement and the equipment costs offset it. That's a real challenge as we talk about new procedures and drugs that do improve an objective patient outcome, whether it's satisfaction, a more durable effect or a quicker procedure. How can we afford these new technologies if reimbursement doesn't keep up with the greater cost?

Stephanie Wierwille

“That's a great point about these opposing forces: developing something that really supports the patient, but the payment structure isn't in place for it. Kevin, I think I saw you about to jump in.

Kevin Beiner

“Sure. I've been with Northwell for 21 years, and I've been in this role for six months. On January 1, I assumed the role of chief operating officer. Within the first week we received a significant top-line reimbursement reduction from one of our big municipalities. We're calculating the effects of H.R. 1. We're in late-stage negotiations that aren't going well with one of our managed care partners. We're watching this trend pile up, and we're sober and realistic about it. Going into the summer, we're going to have to do some soul-searching and make decisions about our reaction. I say reaction because we're an organization that prides itself on its commitment to the mission, to the community, to research and to education. We're the second-largest provider of behavioral health in the state of New York, and given this dialogue, you can imagine that doesn't exactly bring a positive number to my bottom line. I have to maintain access to our emergency departments for patients who are desperately in need of care, while still growing a business. We're not living on 5, 7 or 10% margins; we're living on a 1% margin by choice, because the choice is to do the right thing for our communities. I reflect on the platform, the mandate, and what we as providers have to jealously guard, which is that we're the ones here for our communities and our patients, and those top-line pressures are jeopardizing that. We can't be shy about it.”

Stephanie Wierwille

“You mentioned the margin challenges and cited 1%. One to 2% is the standard nationwide average right now across all systems, so that's not unusual, and to your point, it can prevent the ability to support the community and give patients the care they need. Bob, you've called yourself the chief mission officer, which I love, so with that hat on, and hearing Kevin's commentary, how are you experiencing reimbursement pressures conflicting with the mission, or are there areas where you're seeing some positivity?

Robert Garrett

“I totally agree with Kevin's comments. This is a challenging time from a reimbursement perspective. One of my frustrations is that if a system like Northwell or Hackensack Meridian is embarking on innovation, meaning we're trying to bend the cost curve by expanding our ambulatory network, expanding hospital-at-home programs, investing in behavioral health and doing screenings in the community for social determinants, there should be some recognition of that in the reimbursement structure, and I haven't seen it. In certain instances there has been, but the majority of the time we're not getting reimbursed for that. The other piece is that the regulations have to keep up with where health care is moving, and sometimes they lag behind. One example: in New Jersey, as we move more care to ambulatory settings, the regulations don't permit us to do higher-intensity cardiac procedures in ambulatory care sites or physicians' offices. They still have to be done in academic medical centers, where the cost is higher. That's why I want to get all the stakeholders together, because it will take effort from everybody to make this work.

On the Medicaid cuts and H.R. 1, we take care of 20% of Medicaid patients throughout New Jersey already. Every time we see a Medicaid patient it's a significant loss, but it's part of the mission, part of being that chief mission officer, and now those rates are going down significantly, which is going to leave the states with a big shortfall. I don't know of any state that has a surplus these days; they're struggling with their budgets too. As we try to be innovative on the health network side, reimbursement needs to come along with that, and regulations need to be updated. Some of them are archaic; I've seen regulations that go back to the 1960s and '70s that have not been updated.

Stephanie Wierwille

“I'm hearing the theme of tension across the board, various things competing. One more thing I'd love to hear about on reimbursement: in the negotiation space, payer negotiations seem to keep getting more heated, with rate increases becoming a little more standard. Is that something you're all seeing? Any trends from a payer relations and negotiation standpoint?

Benjamin Levy, M.D.

“I can hop in from the Hopkins perspective. For those following the story of Hopkins and its battle with a particular health coverage payer, we came front and center to a collision of excessive prior authorizations, frequent treatment denials, administrative burdens and delayed payments. In the end, Hopkins couldn't come to an agreement with the payer, and unfortunately the patients who had that insurance we couldn't see anymore, and the patients got squeezed. It comes back to the patients: how are they going to be taken care of? I was following patients longitudinally for years, and then there was this collision where there could not be an agreement between the health organization and a payer. It's a real challenge, and I'm curious in this conversation how we get around it, because at the end of the day, at least in this scenario, it's the patients who are getting squeezed. We're feeling this front and center at our organization.

Deepak Bhatt, M.D.

“Well, this is happening around the country, I mean, it’s really demoralizing, I think, to health care professionals to be caught in the middle of those sorts of battles with insurers. For patients, it's awful. I mean, as you're saying that, just thinking somebody with cancer having their care disrupted, I'd be that shouldn't be something society tolerates. But nonetheless, this is happening with increasing frequency again throughout the country, and I think we've got to hold insurers to a higher moral standard and not let them hold patients as hostages as they're negotiating with health care systems. I mean, I get it, you know, there's a need to contain health care costs, they have to be part of that discussion, but I don't think putting patients in the middle of that is the right thing to do, and that's an area I think probably there needs to be greater regulation, perhaps at the state level, perhaps at the federal level, but allowing this to continue and just be a periodic thing that just comes up where patients can't go to a particular health care professional because their insurer and the health care system are in the midst of intense negotiations, it's just not right to the patient. We shouldn't tolerate it.

Kevin Beiner

“I like that Dr. Bhatt used the word moral, because if you focus on the dialogue at the table, leverage used to be derived by size. Large integrated networks grew up to go toe to toe with the payers; the payers grew, and now I don't think leverage is based on anyone's size. I think it's based on the public or political rhetoric that's out there. We as providers have a role in affordability, but again, what we're spending on is giving care to people who need care, and the economic equation is that we lose money delivering that care. Bob mentioned what we get for delivering care to a Medicaid patient, a patient who needs and deserves care; we lose money on that transaction. If we're going to talk about affordability, we have to look and say we have an obligation to our communities and our patients, and if we do a good job, we'll expand access, and the aggregate cost may go up. But that should be a good thing if you're thinking about people who need basic health care. Getting ahead of affordability is going to require more people receiving care at an early level, as high up the chain as possible. We just need to speak with one voice. Like I said, Dr. Bhatt, I love that you called it the moral high ground, because it is, and Bob, you mentioned being the chief mission officer; it really is a mission, and we shouldn't be shy about it.”

Robert Garrett

“I'll add one point, picking up on patients being in the middle of it. We had a contract under dispute with one of the payers last year at Hackensack Meridian. We ended up resolving the issue, but because the insurance company's policy was to inform patients and providers that Hackensack Meridian might go out of network, it interrupted hundreds of people's cancer care in the middle of chemo and radiation treatments, and that is just so immoral and unethical. We actually called patients left and right to reassure them, and if they did want to switch to another provider, we made sure there was a good handoff and that care wasn't interrupted. But hundreds did fall through the cracks because of those letters going out in a form sense, without real compassion for the patient. The patient was totally in the middle of it, and when you see those kinds of actions, it's disturbing. Back to the mission: that's not what the folks on this call do. We take care of patients, we care about patients, and they should be the center of everything we do.”