Hartford Business Journal

12 HARTFORDBUSINESS.COM | MARCH 24, 2025 IMAGE CREATED BY CHATGPT Rate Debate Amid rising costs, hospital and health insurer contract disputes become more frequent, contentious and four national health insurers. "I think it's a broad range of points that negotiations take on," Halpin said. "In terms of broad categories, quality and reimbursement, I think, are the two headings, but it gets into the case mix. It gets into location differentials, and updated delivery models, like whether services are being performed outpatient as opposed to inpatient." There are also sticking points, Halpin said, on coverage of new drugs and therapies, or new treatments or facilities like proton beam centers, which will soon exist as a cancer treatment option in Connecticut. As far as rising costs are concerned, she notes that insur- ance companies face demands from lawmakers, employers and consumers to keep premiums, deductibles and co-pays down. "So, ultimately, it really does come down in most negotiations to an issue of payment rates," she said. Halpin, though, also notes that another trend has put upward pres- sure on costs: hospital consolidation. "The most dramatic factor is the increase in provider and hospital consolidation, and the fact that market power has really shifted in favor of those organizations by virtue of their size," she said. Connecticut's healthcare landscape is dominated by three major systems — Yale New Haven Health, Hartford HealthCare and Trinity Health Of New England — which collectively own 14 of the state's 27 acute care hospitals, and accounted for $12.4 billion, or about 70%, of the industry's $17.6 By David Krechevsky davidk@hartfordbusiness.com I t has become all too common: A healthcare system and an insurance company approach the expiration date for their contract and become embroiled in a nasty dispute. Letters from each blaming the other side are sent to patients covered by the insurance company, warning that their physicians may end up out of network if a new contract is not reached before the expiration deadline. The letters, which are posted to the insurer and health system's websites, also inform those affected that state law requires a 60-day grace period after the contract expires. And then, just as suddenly as the dispute was made public, a new contract is reached and all is well again. If this sounds familiar, it should. Over the past 10 months, there have been five public health system vs. insurer disputes. Four were resolved — two before the contracts expired, two after but before the end of the grace period. The fifth — between Hartford HealthCare and UnitedHealthcare — remains ongoing. The deadline for a new contract is midnight, March 31. The number of disputes in less than a year raises questions about why they seem to have become more frequent. The reasons, experts say, range from changes in medical care and state law to financial and political pressures — on both sides. Inflation impact Paul Kidwell, senior vice presi- dent for policy for the Connecticut Hospital Association (CHA), says the negotiations are, in fact, getting more challenging. "I do think we have seen more of the nego- tiations getting closer to the point at which noti- fications have to be made … and it's more visible," he said. "The ones that we hear about certainly are the ones that get closest to the deadline, where there's a real threat that the provider would have to go out of network." Kidwell said the number of disputes is growing for a basic reason — rising costs. The CHA published a report in December that concluded Connecticut hospital costs for drugs and supplies grew 10% and 6.8%, respectively, in fiscal 2023, or by $249 million and $92 million. "What we've heard, first and fore- most from a hospital perspective, is we're living in a period of inflation, where our costs have risen dramati- cally faster than in the prior periods," he said. "In order to remain viable in our communities, (hospitals) have to make sure that we're covering those costs, and we don't have many options for where to go to cover those costs." That's primarily because Medicaid reimbursement rates in the state are so low, he added. In fact, reim- bursement rates for most physician services were set by the state in 2007 at 57.5% of the Medicare rate and have been adjusted only for a handful of providers since. "We negotiate with commercial payers and that's where we negotiate to make up the difference," Kidwell said. Less competition While rising costs is one issue, there are many more, says Susan Halpin, co-principal for the govern- ment relations group at Hart- ford-based law firm Robinson + Cole and executive director of the Connecticut Association of Health Plans, which represents one regional Paul Kidwell Susan Halpin

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