Those in healthcare hoping to see the end of bitter price feuds between health insurers and providers as value-based contracting becomes more widespread may be doing the healthcare equivalent of waiting for Godot—anticipating something that will never come.
Recently, Sutter Health and Blue Shield of California, two behemoths in the Golden State's healthcare setting, have been sparring over expired reimbursement rates. Sutter spokesman Bill Gleeson said the $10 billion system made “an extremely fair and reasonable offer” by proposing an overall price increase “that is less than 1%.” However, Blue Shield, which has about $11 billion in annual revenue, said in a statement that “Sutter has a long history of driving up the cost of healthcare.”
Similar battles between payers and health systems have routinely cropped up across the country, including recent high-profile cases in Connecticut, Florida and Georgia. Nearly all center on which party has more negotiating clout in their respective markets.
These types of disagreements will likely persist in a value-based reimbursement setting, which prioritizes high-quality outcomes and reduced costs. What will change will be the sticking points between payers and providers—such as issues of per-member per-month fees and performance measures.
“It'll just change what they argue about, not whether they argue,” said Mark Pauly, a health economist at the University of Pennsylvania.
Indeed, some say “we're going to see more of these price disputes than less,” said Texas A&M University Health Economist Michael Morrisey, because actual price transparency has not yet permeated the consumer market and negotiations remain veiled in secrecy.
Richard Hirth, a health policy professor at the University of Michigan, said there may be some hope for change, however. Value-based reimbursement still has the potential to decrease price conflicts between insurers and providers, he said, because it should, hypothetically, result in more collaborative, less wasteful care.
“If their incentives are a little more aligned, they obviously have less to fight about,” Hirth said. “I think there's less benefit to airing your laundry in public. You essentially are a team, whether you're integrated or not.”