Contract Renewal May Result in Loss of Business for Florida Hospital

Friday, September 25, 2015
By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

Adventist Health System, parent company to Florida Hospital, renewed its contract with Florida Blue in May of this year.  The contract renewal includes the termination (effective October 1, 2015) of four Florida Blue Medicare Supplement plans, leaving approximately 4,000 central Florida residents who previously had coverage without coverage at several area hospitals.

Medicare Supplement plans are available to Medicare recipients to cover some of the health care costs not already covered by Medicare.  These costs may include:

    (a)    co-payments;

    (b)    deductibles; or

    (c)    hospital fees.

The Medicare Supplement plans offer insureds lower premiums for using in-network hospitals.  However, due to the contract renewal between Adventist and Florida Blue, patients with coverage under four of these supplement plans will now be out-of-network at Florida Hospital.  This may result in a loss of business for Florida Hospital as those 4,000 patients may choose to search elsewhere for in-network providers.  


The Effect of Contract Negotiations Between Hospitals and Insurance Companies.

Failed negotiations and broken contracts make headlines in the health industry, whereas in other industries it may not even warrant a second thought.  Although many companies are faced with contract negotiations as a common business practice, the contractual negotiations between hospitals and insurance companies hold an increased significance.

This is the result of the relationship built between patients and their physicians or other health care providers.  It can be highly disruptive for a patient to be forced with a decision to switch providers or pay high out-of-network fees.  Not all patients have the ability to simply switch insurance companies to stay in-network with certain providers, whether it is due to employer plans or higher premiums.  

When contract negotiations between providers and payers fall short, patients take heed and bear the brunt of the effect.  This can ultimately result in a loss of patient loyalty for hospitals.  

To read more about hospital and insurer contract disputes, why they exist and the effect they have on patients, click here

Negotiating a Contract.

If you are a health care provider, there are several things to consider in negotiating a contract:

    (1)    It is important to understand your existing contract;

    (2)    Research is required to be best prepared to negotiate;

    (3)    Spacing out contract negotiations throughout the year is imperative;

    (4)    It's necessary to know and provide data during negotiations; and

    (5)    Competitive pricing is essential to retain strong payer contracts and patient loyalty.  

For more information on best practices for contract negotiations, click here

Contract negotiations involve a lot of research and preparation, and the actual negotiations can be daunting.  It's helpful to have an experienced health attorney to assist you through the process and best negotiate your contract.  If you have a payer contract nearing renewal, do not delay in consulting a knowledgeable attorney.


Comments?

Are you satisfied with your current payer contracts?  If not, what are you hoping to renegotiate when the contract is eligible for renewal? Please leave any thoughtful comments below.


Contact an Experienced Health Care Attorney.


The attorneys of The Health Law Firm represent physicians, medical groups, nursing homes, home health agencies, pharmacies, hospitals and other health care providers and institutions in investigations and defending alleged HIPAA and FIPA complaints and violations and in advising on data breaches.

To contact The Health Law Firm, please call (407) 331-6620 or (850) 439-1001 and visit our website at www.TheHealthLawFirm.com.


Sources:

Ellison, Ayla.  "Hospital-Insurer Disputes: Are Things About to Get Ugly?"  Financial Management: 1 Apr. 2015.  Becker's Hospital CFO.  Web.  18 Sept. 2015.

Herman, Bob.  "The Ins and Outs of Successful Hospital Insurance Negotiations and Service Pricing."  Financial Management: 21 Sept. 2011.  Becker's Hospital CFO.  Web.  18 Sept. 2015.  

Miller, Naseem.  "Florida Hospital to Quit Taking 4 Medicare Supplement Plans."  Orlando Sentinel.  10 Sept. 2015: A12.  Print.  


About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida area.  www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.


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9/25/2015

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