ECG recently hosted a virtual roundtable that brought together managed care leaders from children’s hospitals around the US. In a confidential, collaborative environment, attendees were invited to share their experiences and discuss challenges and market dynamics. Participants spoke frankly about the day-to-day rigors of managed care as well as a variety of strategic and operational implications driven by the payer landscape.
Although the roundtable attendees represented different states with distinct regulatory environments and unique market characteristics, their biggest concerns were remarkably similar. Here are the three top challenges they cited.
1. High-Cost Drugs and Therapies
Soaring drug prices are an industry-wide challenge, but the issue is particularly acute in children’s hospitals, where Medicaid is the predominant payer. Cutting-edge therapies can cost millions of dollars annually, and reimbursement from payers is often inadequate or difficult to obtain. Multiply that across hundreds of children who may have a critical need for one of those therapies, and the problem is clear. Low or no reimbursement for children’s hospitals is not sustainable.
Beyond the unprecedented and eye-watering price tags is the challenge of communicating with clinicians, who want to move quickly to adopt new drugs and therapies, and families who simply want the best possible care for their children. Making sound business decisions that involve precision medicine or life-changing therapies has long-term implications on children’s hospitals’ financial performance and clinical outcomes for the children served.
2. White Bagging
Attendees cited white bagging—the practice by which prescriptions are filled by a third-party pharmacy contracted with a health plan, even if the hospital has the drug in stock—as a growing concern. Hospitals encounter an array of policies that differ by payer and state and have had mixed success in challenging the legality of the practice. Provider concerns about white bagging include the possibility of delayed care for patients, excessive cost sharing, and the hospital’s lack of control over drug acquisition and delivery.
3. Denial Rates
The relationship between health plans and hospitals is becoming increasingly contentious, with attendees citing payer denial rates as a continuing pain point. The number of denials from the payers continues to increase. Participants were frustrated by several issues in particular:
- Lack of oversight and accountability at the state level. Getting the attention of state insurance regulators can be difficult. Some hospitals have begun collaborating to collect denial rate data with the intent of presenting a complete, compelling picture to state oversight bodies—and to the public.
- Partial denials. A payer’s overall rate of denied claims may appear low if it does not account for partial denials. At least one attendee said that the rate of partially denied claims was getting “out of hand.” Again, accurate data can help hospitals create the full picture of payer denial rates.
- Burdensome legal recourse. A health system can always take payers to court if it suspects their actions run afoul of the law, but how far to pursue these cases is a common quandary. Legal battles are expensive and can last for years.
Compounding those issues is the administrative burden and added expense (in the form of more staffing) required to address the denials.
About the Roundtable
ECG’s quarterly Managed Care Roundtable for Children’s Hospitals is open to managed care leaders who are willing to share their ideas and perspectives. These ongoing conversations are an opportunity for seasoned leaders to learn from one another and engage in productive discussions about best practices and innovative solutions.
If you’re interested in attending, contact Ken Steele at ksteele@ecgmc.com, Purvi Bhatt at pbhatt@ecgmc.com, or Alan Lassiter at aklassiter@ecgmc.com.
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Edited by: Matt Maslin
