Starting tomorrow, tens of thousands of Denver area patients will not longer be able to go to their usual hospitals and clinics without paying high out of network rates, leaving them with health insurance worth far less than they bargained for when they signed up. David Rivera, Colorado’s commissioner of insurance, appointed by Republican Governor Owens, could have intervened to force negotiations to avoid the harm to patients that is likely to result, and was urged by the Colorado Medical Society to do so, but chose not to act.
HCA, Inc., one of the largest health care providers in metropolitan Denver, and United Health (including daughter marques PacifiCare and SecureHorizons), one of the state’s largest insurers, have failed to reach a deal before their contract expired, so all HCA facilities have been dropped from the United Health network of providers. Emergency care reimbursement is not affected, nor is reimbursement for hospital stays currently in progress. According to the Denver Post, HCA serves a million patients in the Denver area, and United Health has 850,000 patients in Colorado. About 30,000 United Health patients have used HCA facilities in the past year. Patients with certain illnesses such as “end-stage renal disease, non-surgical cancer therapy and symptomatic AIDS” can seek a “continuity of care” exception to the general out-of-network rate switch from the insurance company.
HCA facilities include: Sky Ridge Medical Center, Swedish Medical Center, Presbyterian/St. Luke’s Medical Center and Rose Medical Center, North Suburban Medical Center, Medical Center of Aurora and Spalding Rehabilitation Hospital.
The Denver Post reported in a picture caption that National Jewish Hospital was part of the HealthOne network that HCA manages, but that is not really correct. National Jewish has a contract with one Health One facility, Rose Medical Center, to provide internists for selected critical care cases. National Jewish Hospital itself is not a HealthOne facility and thus is not run by HCA and covered by the contract that expires today.
Even those who do business with neither HCA nor United Health or PaciCare will likely be affected by the impass, as United Health insureds flood into other facilities.
According to the Denver Post, HCA was asking for a “single-digit rate increase in reimbursement rates.” United Health has resisted the increase. The unwillingness of the parties to deal is in part because the stakes are far larger than the Denver market, which is the immediate subject of these negotiations. Both companies expect this deal to form a pattern for negotitiations between the two health care giants in other markets nationwide.
Another factor in the impass is the high profit margin that HCA has now. According to the Rocky Mountain News:
A report last November by Colorado Managed Care Review found that the HealthOne hospitals had the highest net income in metro Denver, with an 18.5 percent margin, followed by the Exempla hospitals at 11.8 percent and the Centura hospitals at 8.8 percent.
The hospitals that did the majority of Medicaid and charity care, such as Children’s, Denver Health and University Hospital, had a net income of 1.8 percent.
HCA has the contract to operate HealthOne hospitals.
While the Colorado Medical Society begs to differ, Insurance Commissioner Rivera claims, according to the Rocky Mountain News that “state law prevents him from getting actively involved in the negotiations.” This doesn’t, of course, contradict the claim of the Colorado Medical Society that the parties could have been compelled to negotiate further, as long as the insurance commission wasn’t actively involved in the negotiations themselves.
Consumers come out ahead if the insurance company gets a good deal, beacuse increased costs of care translate into higher health insurance rates. But, consumers benefit only if their care is not disrupted by impasses like this one, which hurt patients, HCA and United Health alike. Also, if the insurance company drives too hard a bargain, providers like HCA may cut corners and reduce the quality of care.
In the Denver market, the pain suffered by United Health insureds during the impass will likely far exceed the benefits that their employers (and indirectly them, to some extent) will receive from a few percentage points lower increase in provider costs. And, of course, patients covered by other health insurance companies in Colorado, such as Aetna, Anthem, Cigna and Sloans Lake, who suffer from overcrowding at their facilities due to the impass, will receive nothing in return.
Colorado Confidential discussed the possibility on Tuesday.
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