What’s important to hospitals, employers differs
Hospital leaders want respect; businesses desire cost savings
How much health insurers pay is important to hospital executives, but it pales in comparison to provider and hospital relations.
Trust, respect, and good business practices are not universal in the relationship between payers and hospitals, says Brandon Edwards, president and chief operating officer of Davies Public Affairs in San Diego, which recently released its third survey of hospital executives who negotiate contracts with major health insurance companies.
“When it comes down to it, it’s not about money to these guys per se. It’s about trust. It’s about relationships and it’s about credibility,” says Edwards.
The public affairs group focuses on three industries, including healthcare, and conducts an annual survey that quizzes hospital leaders, such as CEOs, chief financial officers, and managed care directors. For 2009, Davies added an employer survey, and the two surveys show the varied interests of the two groups. The survey of hospital executives found that the top priority for hospitals in 2009 is increasing rates with their largest payer.
The third priority, shifting market share from one payer to another, saw the largest increase from the 2008 survey and highlights hospital executives’ dissatisfaction with health insurers and marketplace volatility. (See Figure 16 below.)
“At a large national player, you have to have a philosophy and have the people who can carry out that philosophy who are good at provider relations. If you are treating people fairly, meaning what you say, and carrying through on contracts, you can’t have a business strategy that deliberately alienates providers when the dominant value you provide is access to a provider network,” says Edwards.
Outliers in the survey
Once again this year, Davies found two outliers in the health insurance industry. Aetna again topped the list of insurers with a positive image and reputation, and CIGNA ranked second. On the other end was UnitedHealthcare, which received an 82% negative rating from hospital executives who took the survey. (See Figure 17 on p. 21.) “In some basic ways, you can say Aetna has become a provider-friendly health plan,” says Edwards.
The three phrases hospital executives used to describe UnitedHealthcare were “rigid/inflexible,” “difficult,” and “dishonest.” Sixty-two percent of hospital executives who took the survey ranked UnitedHealthcare the worst health insurer during contract negotiations, whereas Aetna topped the list of best health plans with 28% in that category. (See Figure 18 on p. 21.)
UnitedHealthcare also ranked lowest in reimbursement rates, honesty and candor in contract negotiations, timeliness and responsiveness in contract negotiations, timeliness in processing and paying claims, denial of claims, and fixing claims in a timely manner. (See Figures 19–24 on pp. 22–24.)
Aetna topped the list for positive contract negotiations and ranked high in critical hospital issues along with independent Blue Cross Blue Shield plans.
In a prepared statement, Paul Marchetti, director of Aetna National Networks and Contracting Services in Middletown, CT, said:
Aetna works hard to make it easy for providers to do business with us. We believe we have made tremendous progress in our ability to simplify business transactions, to deliver quality service and information, and to make our business processes as transparent as possible.
We are committed to continuous improvement, and we are pleased the Davies survey results reflect the progress we have made. By being easier to work with and collaborating with the medical community, plan sponsors, members, and legislators, we can help improve the quality and cost-effectiveness of healthcare.
The reason reimbursement rates are not as important as provider relations is that hospitals don’t have problems with UnitedHealthcare’s reimbursements. Repairing relationships is more difficult than increasing reimbursements, says Edwards.
“Aetna has decided that there is value in good provider relations and a stable provider network, and United, I think, has decided, or behaved like they decided, that it doesn’t matter if doctors like them or hospitals like them or if they have good relationships; they are going to squeeze every dollar no matter what,” says Edwards.
UnitedHealthcare responds to survey
UnitedHealthcare representative Cheryl Randolph, who is based in Los Angeles, said Davies’ “selective, non-scientific” survey misrepresents the insurer’s positive relationship with most hospitals. As proof, Randolph said UnitedHealthcare added more than 100 hospitals to its national network last year and now reaches 84% of U.S. hospitals. “Productive, collaborative relationships between hospitals and payers are important if we are going to make progress together in modernizing our nation’s healthcare system, and UnitedHealthcare has taken a number of steps to improve how it works with healthcare providers,” Randolph said in a statement.
UnitedHealthcare has worked with hospital systems to improve the accuracy and speed of electronic claims submissions and payments, Randolph said. The insurer’s primary claims platform pays more than 20 million claims per month, with 82% processed automatically and 95% paid within 10 days.
UnitedHealthcare has partnered with more than 200 hospitals in an effort to improve claim payment accuracy. One example is the Christus Health hospital system in Dallas, where the system and insurer worked together to improve claims accuracy and payment through improved revenue cycle management.
The insurer has also implemented physician outreach through telephone surveys and provider councils and created ways to reduce administrative burdens for care providers through real-time adjudication and claims estimator tools, swipe card technology, and online member personal health records, Randolph said.
“We regularly and actively engage with physicians and care providers to capture extensive feedback, and that dialogue is instrumental in our continuous efforts to enhance and improve our service to them,” she said.
Provider relations are important
The survey results show that provider and hospital relations are important to a health insurer’s success. “What seems clear if we look at last year’s earnings and Wall Street announcements, there seems to be some correlation, if not causation, between good provider relations and membership growth on the commercial side,” explains Edwards.
This year’s survey was the first time Davies divided independent Blues and Anthem Blues. Edwards says Davies did this to provide a more accurate picture of the plans.
Hospital executives often don’t like independent Blues’ reimbursement levels and their domination in markets, such as Rhode Island, Mississippi, Alabama, and Florida. However, hospitals still trust independent Blues to follow through on promises and treat hospitals fairly, says Edwards.
“I think when these guys sit across from an independent Blue, they might not always love them, but they believe them,” he says. “That’s what stands out so dramatically. That’s just not the case for United and, to a lesser extent, for Anthem.”
It’s money that matters to employers
For its first employer survey, Davies interviewed 400 employers, which consisted mostly of small businesses. Although many employer studies have focused on large or jumbo employers, Davies wanted to provide a greater representation of businesses, because nine out of 10 U.S. employers are considered small.
The emphasis on small employers is evident in some of the results. “For small businesses, these costs can drive whether they make it or not or whether they are able to provide insurance at all,” says Edwards.
The employer survey, which was completed by benefit managers and HR executives, found that most employers are pleased with their health plan. Employers were most satisfied in the areas of selection of doctors and specialists, choice of community and regional hospitals, ease of filing claims, enrolling new employees, and information about changes to coverage.
The biggest factor in choosing a plan for the employers surveyed was the cost of premiums. Half of respondents pointed to premiums as the No. 1 factor, whereas physicians in the plan ranked a distant second. Although employee wellness programs have rated highly for large and jumbo employers, the mainly small employer respondents in the Davies survey were not as interested. Only 4% ranked wellness programs as the top factor, and more than one-third placed it as the least important of six choices.
When removing costs from the equation, a mere 6% of respondents pointed to wellness programs as the most important factor. Health plans are not spending much on disease management, prevention, and wellness because most employers are not interested, Edwards says, adding that wellness will have to become a standard piece of benefit design to get small employers interested in those programs.
“Large employers clearly have interest in and value wellness programs, but when you get down to the small business level, it’s all costs,” says Edwards, noting that five years ago, small employers were most interested in quality, access, and choice.
More than half of respondents also said their health insurance premiums are too high. A similar amount said their premiums have increased over the past 12 months, which was an increase of 17% from last year’s survey.
However, nearly half of respondents said the primary cause for rising premiums was not actual medical care. Insurance company profits, malpractice lawsuits, and paying for uninsured care were the top three causes for rising premiums, according to respondents.
“All of those three things are in some way systematic to flaws in the system. They really don’t have anything to do with the care of sick people,” says Edwards.
Less than 10% of respondents chose government mandates, prescription drug costs, or doctor care as the reason for spiraling costs.
Employers are largely pleased with their health insurers, Davies says. Although they are most concerned about costs, businesses aren’t blaming insurers for higher premiums, but rather pointing to the healthcare system in general.
“I did not expect employers to be as positive about the health plan that they had selected overall and yet still as negative about costs and the cost drivers. It’s sort of an interesting dichotomy,” says Edwards. “What it shows us pretty clearly is that the employers are relatively happy with their health plans, but they view the system as fundamentally broken and they think their costs are too high.”
When it comes to health insurer reputation among employers, the disconnect between employers and hospitals is clear. Employers ranked CIGNA, Blue Cross Blue Shield plans owned by Anthem, UnitedHealthcare, and Coventry much higher than hospital leaders.
These results could be partly because the companies are better at employer relations than provider relations, Edwards says, adding that employers are largely pleased with payers, whereas hospitals, physicians, and employees are dissatisfied.
Hospitals need to educate the public, particularly employers, about challenges hospitals face with health plans so the public understands the value of payer behavior and network stability when choosing a health plan, Edwards says.
“The stability of the provider network and how that health plan treats its business partner, I think, ultimately should matter to the employer,” he says.