To fear consolidation, or not to fear? How industry mega-payers may affect provider reimbursements

The health insurance industry is poised on the verge of large-scale consolidation as its leaders seek to drive down health expenses and increase negotiating powers.

With the proposed Aetna-Humana and Anthem-Cigna transactions — valued at $37 billion and $54 billion — expected to close this year, healthcare leaders and consumers are equally concerned about the possible impact on their respective pocket books.

Jim Lazarus, managing director of strategy and innovation with The Advisory Board Company's revenue cycle solutions division, spoke with Becker's Hospital Review about how unprecedented payer consolidation may change provider reimbursement practices. 

Sine the transactions were first proposed, many hospital advocates and health system officials have sounded antitrust alarms, arguing the mergers may amplify payer power to the financial detriment of providers during contract negotiations.

"Bigger insurance companies mean increased leverage and unfair power over negotiating rates with hospitals and physicians," said American Medical Association President Steven Stack, which could pressure physicians into accepting unfair reimbursement terms.

Hospital CFOs and other financial leaders are right to consider how new power relations may play into payer-provider negotiations, Mr. Lazarus believes. On the other hand, value-based contracting is beginning to dominate conversations between healthcare organizations and insurers.

Under value-based payment models, payer and provider financial incentives are more closely aligned. However, if the mega-mergers move forward, Mr. Lazarus says payers may use their enhanced market power to increase pressure on hospitals and health systems to advance risk-based patient care and value-based reimbursement models maybe faster than providers anticipate.

The Aetna-Humana, Anthem-Cigna mergers also pose a concern for hospitals that rely heavily on those payers for reimbursement, as those healthcare organizations may experience extended claims processing timelines and delayed reimbursements during the transactions.

"Hospital margins are thin enough as it is, and each small change that comes down the pipeline has the possibility of making a significant impact," says Mr. Lazarus.

To help prevent an administrative backlog, hospitals are working with payers to evaluate their individual performance in claims submission, processing and denials management.

By shoring up claims inefficiencies on their end, hospitals can reduce their risk and minimize possible administrative and reimbursement challenges.

"The truly integrated affects of these mergers are two or three years down the road," Mr. Lazarus says. In the mean time, a growing impetus for collaboration and communication between payers and providers has some industry experts carefully optimistic for improved industry relations.

More articles on revenue cycle management:

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