Hospital to Union: Pay Up or You’re Stuck With Us
On May 22, 2024, the Wall Street Journal reported that the 32BJ Health Fund was on the cusp of negotiating a new deal with Aetna to cover its 210,000 members when they learned that the Union Fund would have to pay New York-Presbyterian, one of the largest hospital systems in the city, $25 million to stay out of the Fund’s plan, ultimately resulting in the deal falling through.
Big, high-profile hospital systems, like New-York Presbyterian, can command premium rates and favorable terms in their negotiations with private insurers, and deploy bare-knuckle tactics to get what they want. For example, these hospital systems can demand to be included in all the insurer’s networks, even if a client doesn’t want or request them. Often unaware of these demands, health plans enter unfavorable contracts, paying prices as much as two or more times what the government spends on the same medical services.
According to a Service Employees International Union affiliate, the 32BJ Health Fund didn’t want its insurance policy to include New York-Presbyterian due to its notoriously high pricing. However, Aetna’s contract with the hospital system requires the insurer to get a sign-off from New York-Presbyterian to omit it from a client’s plan. Arguing 32BJ owed it for past medical services, New York-Presbyterian named its price for being excluded: $25 million.
Unable to offer a plan that 32BJ wanted, the Health Fund decided not to sign with Aetna, despite Aetna being their preferred health insurer. Union officials say they don’t blame Aetna for the situation, but the savings from switching to Aetna would not have offset the $25 million required to exclude New York-Presbyterian.
While the Consolidated Appropriations Act of 2021 takes a great step toward transparency by giving health plans access to their medical and pharmacy data, access to the intricacies of payer and provider contracts is still opaque. Additional steps, such as diligently dissecting your carrier and third-party administrator (TPA) contracts and asking tough questions, are necessary to control costs. Contact Bolton for additional guidance to control future spending for your health plan.
