HJAR Nov/Dec 2023

10 NOV / DEC 2023 I  HEALTHCARE JOURNAL OF ARKANSAS As this vortex of uncompensated care, inflationary pressures, rising labor costs, and Medicare and Medicaid reimbursement levels remain woefully below costs in our state, the pressure builds to reduce expenses and hold insurers accountable for covering the costs of care. Negotiations with insurance companies are typically conducted either behind closed doors, or the insurance company changes are made, and hospitals receive only a “take it or leave it” notice. Rarely do those nego- tiations become public or receive any type of press coverage. Recently, we have seen hospitals and insurance companies at an impasse in these negotiations with contracts expiring and patients going out of network. Why are insurance payments important? Hospitals are generally paid from four “buckets”: commercial insurance, Medicare, Medicaid, and self-pay (mostly uninsured). The payer mix of patients is very impor- tant to a hospital’s survival. In small, rural communities, you will see less commercial insurance and more Medicaid andMedicare. For the entire state of Arkansas, the payer mix of inpatient care breaks down like this: 30% commercial insurance, 22%Medicaid, 37%Medicare, and 4% self-pay. The relationship between insurance companies and hospitals is a complex and often tenuous one. Each side says they are committed to collaborating to provide the best care possible for patients, but this “col- laboration” involves ongoing conflict over negotiations on reimbursements, prior authorizations, claims denials, and actual payments. The financial outlook for hospitals is grim, as evidenced by a recent study con- ducted by the Center for Healthcare Qual- ity and Payment Reform. The report shows that in Arkansas, 37 of our 49 rural hospi- tals (or 76%) are losing money on the day- to-day business of providing hospital ser- vices. As is true in any industry, revenue levels that fall short of covering expenses are unsustainable. As the public health emergency has officially come to an end, Arkansans with Medicaid coverage must have their eligibil- ity redetermined. These redeterminations will have a profound impact on our patients as they seek access to their prescriptions and to preventive care — in some cases not knowing that they have been unenrolled. And, as the number of uninsured patients in hospitals inevitably increases, the levels of uncompensated care our hospitals see will also increase. Arkansas hospitals rely on Medicaid and Medicare to pay for 59% of their patients, and payments from those programs rou- tinely fall well below the cost of the care provided. These underpayments from gov- ernment-funded healthcare plans make the commercial insurance reimbursements extremely important in balancing the pay- ment deficiencies. Formally known as the “cost shift,” it no longer provides this balance, as most insurers no longer update their contracts to provide payments that are higher than Medicare to ensure that — on the whole — the provider has enough revenue to cover the costs of care. In larger states with more insurance company competition, healthcare providers may still see a cost shift, but not as much here in Arkansas. As our insurance premiums continue to rise steadily, the public’s perception is that healthcare providers and hospitals must be increasing their prices thusly making the premiums increase. The numbers sug- gest otherwise. The average family insur- ance premium has increased 47% over the past 11 years — a steeper hike than you’ll find in any other part of the healthcare system. It’s not all about payments … paperwork We have all either had a personal expe- rience — or a family member of ours has — with prior authorizations. It may have happened at the physician’s office, hospi- tal, pharmacy, or in interactions with any other healthcare provider. Insurers would say that these administrative requirements of providers are meant to control the costs of receiving healthcare, but these policies have become burdensome and costly to hospitals, providers, and patients alike. Hospitals report the hiring of full-time staff to monitor bulletins sent by insur- ers and to follow up on claims denials and prior authorizations. These administrative requirements add up to service delays and increased expenses. Areport by the Kaiser Family Foundation (KFF) found that nearly 17% of in-network “Hospitals are generally paid from four ‘buckets’: commercial insurance, Medicare, Medicaid, and self- pay (mostly uninsured). The payer mix of patients is very important to a hospital’s survival. In small, rural communities, you will see less commercial insurance and more Medicaid and Medicare.”