Health insurers push patients away from hospitals

Originally published by Crain’s.

Health insurers are increasingly creating programs to encourage patients to move away from hospitals and instead use lower-priced outpatient providers or in-home services to reduce health care costs and hold down premiums.

The insurers are requiring prior authorization for services done at hospitals for administration of intravenous drugs and want patients to use lower-priced outpatient providers or get infusion services done at home by a visiting nurse. They also are flat-rate contracting with providers for joint replacement surgery. That’s changing how hospitals do business.

Employers are demanding health insurers restrain rising costs, and patients also are realizing they pay more out of pocket with high-deductible benefit plans if they go to higher-cost settings. Hospital officials agree that some services can be delivered in lower-cost outpatient settings, but caution that some higher-risk patients should be allowed to continue to be seen by hospital providers.

In Michigan, some health insurers, including Blue Cross Blue Shield of Michigan and Priority Health, have created programs to eliminate from coverage most infusion services at hospitals or outpatient centers owned by hospital chains. They also are using bundled pricing schemes for total joint replacement surgery to push hospitals to lower prices or move procedures to lower-cost outpatient settings.

Peter Schonfeld, the MHA’s COO and senior vice president of policy, said hospitals will be hurt financially by the Blue Cross policy, and some hospital-owned infusion centers might close in areas without high numbers of commercially insured patients. He said hospitals also could be financially hurt by the bundled payment program as they cut prices or lose patient volume.

Mark O’Halla, COO of McLaren Health Care Corp., a Grand Blanc-based nonprofit system with 13 hospitals, said McLaren and other health systems will need to adjust to health insurers moving patients to outpatient settings.

“We are having to switch gears. It will change the way we do business because we won’t have the volume coming in” for infusion therapy and joint replacements, O’Halla said. “Insurance companies and Medicare are pushing more (patients) to outpatient settings.”

Rob Casalou, president and CEO of Mercy Health and St. Joseph Mercy Health System in Ann Arbor, said every hospital administrator is trying to lower inpatient costs because employers want it and insurers are offering special contracts that pay lower prices while tacking on incentives for quality.

“The reason why hospitals enjoyed higher reimbursement for infusion is because we incur costs that others don’t,” said Casalou, adding that hospitals operate 24-hour emergency departments and incur millions of dollars in uncompensated care.

“Now (Medicare and Medicaid) and commercial payers are saying that inflates care,” Casalou said. “The whole debate is changing in front of us.”

Read the full story at: http://www.crainsdetroit.com/article/20180401/news/656771/health-insurer…