Healthcare IT Interoperability, EHR interoperability, Hospital Interoperability

Claims Management News

Trial Date Set for Aetna-Humana Health Insurance Merger

U.S. District Judge John Bates has set December 5 as the date for the Aetna-Humana health insurance merger court case.

Health insurance companies and private physician practices or hospitals have often been on opposite sides of the fence when it comes to operating their organizations and managing their patient base. The typical stereotype is that payers and providers are essentially enemies with one side trying to cover the costs of care while the other provides treatment. In the real world, things aren’t so simple.

Health Insurance Mergers

Both public and private healthcare payers are currently seeking ways to boost patient outcomes that would lead to healthier populations and use preventive care to reduce constantly rising medical costs in this country. While some providers have seen their medical claims be denied for obscure reasons, other payers have seen hospitals take advantage of the system as well.

For instance, a new proposed ruling released by the Centers for Medicare & Medicaid Services (CMS) outlines some of the problems that have occurred in the past. This month, CMS released the proposed rule called Disproportionate Share Hospital Payments – Treatment of Third Party Payers in Calculating Uncompensated Care Costs, which discusses how states and hospitals were misrepresenting themselves when they were not disclosing third party insurance coverage among Medicaid eligible individuals when requesting uncompensated payments.

Before a ruling made in 2008, a number of hospitals were conducting their business in a manner that did not account for either Medicare coverage or other third party coverage. This led to a wrongly inflated rate for uncompensated care costs and hospital-specific disproportionate share hospitals (DSH) limits. Some hospitals were being paid twice as much by multiple payers such as Medicaid and Medicare.

The final rule set in 2008 as well as current implementations in the proposed rule is meant to support more equal distribution of DSH payments by ensuring that no extra payments occur that have already been covered by Medicare or other third party payer. This also ensures hospitals are paid specifically for all uncompensated care that occurs when providing either inpatient or outpatient medical care among Medicaid beneficiaries or patients without health insurance.

Along with past problems that some payers faced in covering fraudulent costs of care, the Affordable Care Act in recent years has also led to several challenges that payers must overcome.

Some experts such as Patrick Pilch, Managing Director and National Healthcare Advisory Leader of The BDO Center for Healthcare Excellence & Innovation, have predicted an increase in the number of health insurance mergers in order to overcome the high risk pools set up by the ACA along with the requirements to cover all costs of preventive care and keep young adults on their parents’ insurance plans.

“Other payers will be trying to get scale just like Aetna and Anthem. I do believe there will be more pursuits to scale and more activity in mergers and acquisitions. The other piece is that, in those markets, where plans are being diversified out or spun out, middle market plans may be interested in acquiring some of those markets if it makes strategic sense for them,” Pilch told HealthPayerIntelligence.com.

“The other piece is, at the end of November, CMS released proposed rulemaking for the 2017 benefit and payment parameters program. I do believe that CMS is really looking at how to get more robust standardization of health plan options. Consideration among other payers may be: ‘Where am I going? Am I going to scale up and be like the Aetnas, Humanas, and Cignas of the world? Or am I going to try to build around and add on to my midsize plan to boost my capital?’ Again – payers need to think about the customers – its members,” Pilch explained.

“Payers have to make that decision in terms of an acquisition. Can you make it on your own? Do you need to scale? I would say, likely, in most cases, you do need to scale. Geography is ultimately the answer. If you’re a medium-sized plan with a good presence in a particular geography with good plans and effective network adequacy, you should be in a good spot for a period of time.”

While fraudulent billing among providers is clearly unacceptable, many have also declared the two major health insurance mergers between Aetna-Humana and Cigna-Anthem would bring harm to consumers and strip competition away from the insurance market.

The Department of Justice (DOJ) filed lawsuits against these two health insurance mergers to keep the market stronger and ensure consumer interests were protected. For example, if the mergers were to go through, it may lead to an increase in premium costs and out-of-pocket expenses. The DOJ is seeking to keep these mergers from taking place so that consumers receive more affordable coverage.

According to the American Hospital Association, the latest news about the health insurance mergers came from U.S. District Judge John Bates who has set a trial date of December 5 to pursue the Department of Justice’s case against the Aetna and Humana merger. Judge Bates has stated that a final court ruling for the case is expected to conclude in the middle of January.

Currently, this deadline would actually be past the date that the two companies set to complete the deal. It was initially meant to be finished by the end of 2016. Both the District of Columbia and 11 other states also stood on the side of the DOJ and filed a petition in the court against Anthem’s acquisition of Cigna.

Since these health insurance mergers would bring five major national payers to only three, the American Hospital Association have urged the DOJ to block these mergers due to potential harm to consumer interests and competition reduction.

Payers and providers would benefit from seeking ways to overcome the stereotypical opposition amongst themselves that lead to improper billing or harmful strategies to improve revenue. This often means strengthening the payer-provider relationship and improving communication.

“I think the key is defining the objective, but defining it with that partner. If you’re going to enter into an agreement and develop a program - if it is going to be successful - you have to get the incentives aligned properly,” David Thompson, Chief Operating Officer at GlobalHealth, told HealthPayerIntelligence.com. “That’s the most important thing.”

“Understanding exactly what motivates the provider and exactly what motivates the health plan and coming up with metrics and measurement of the success of those programs [is vital].”

 

Dig Deeper:

Will Divestitures Preserve the Health Insurance Mergers?

Department of Justice Moves to Block Health Insurance Mergers

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