“There’s a war going on between providers and payers right now.”
Those words were uttered by Brian Gragnolati, CEO of New Jersey-based Atlantic Health System, during a Tuesday interview at the Reuters Total Health conference in Chicago.
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In his opinion, payers “are doing everything they can” not to pay providers for the care they deliver. Consequently, providers have to spend “a lot of money” to remedy this issue.
“The extent to which denials have gone up is stunning. It’s almost like it’s a game that the payers are playing to try to wear us out. So we’ve had to really work hard to invest in strategies and technologies that help us understand the patterns of those denials and then how we can address those,” Gragnolati declared.
The antagonistic relationship between payers and providers is frustrating because in theory, both of their goals should be aligned, he added. They should both want to keep patients healthy and happy.
For instance, if patients are unhappy with the quality of care they receive at a given health system, they will seek care elsewhere. If enough members are unhappy with their insurance plan and complain to their employer, the employer will switch to another payer, Gragnolati explained.
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“Where we divide is this: we can’t figure out how to assume risk because the fee-for-service model payment is inherently flawed and doesn’t really align incentives,” he said.
In a fee-for-service environment, the relationship between payers and providers inherently puts both parties at odds — providers desire to get paid for all the care they deliver, and payers want to keep their costs down as much as they can.
Atlantic serves about 1.1 million patients, and last year, 480,000 of them were part of some sort of at-risk arrangement, mainly through either a Medicare Shared Saving Program or the health system’s shared accountability arrangement with Horizon Blue Cross Blue Shield of New Jersey. Atlantic’s value-based contract with Horizon BCBSNJ includes about 85,000 covered lives, Gragnolati said.
“When you have programs like that — where you know what the rules are and you’re working in concert to try to provide better access and higher quality care at a lower cost — a lot of the noise goes away. You’re pulling in the same direction, and to me, that’s the solution. But it has been difficult to get payers to give us risk. They talk it, but they don’t do it, and that’s been a big challenge,” he declared.
Gragnolati pointed out that Atlantic is the only health system in New Jersey that has a contract in which the state’s Blue Cross organization takes on financial risk. He added that there is “a real reluctance, particularly from some of the large national payers,” to enter into these kinds of arrangements. Payers often hesitate to embrace risk-based contracts because of the financial uncertainty that could arise if they underestimate the required resources.
While he thinks health systems’ revenue will always come from a mix of value-based care and fee-for-service care, Gragnolati believes that hospitals need to be moving more toward risk-based arrangements.
“It’s easier to operate in a fee-for-service environment, but with all these denial practices we’re seeing, the quality of our revenue is being reduced,” he said.
Credit: Thanatham Piriyakarnjanakul / EyeEm