Health Insurance Companies to Cut Hospital Payments

One of the highest costs for health insurers is their payments to hospitals and doctor visits for services rendered. Providers obviously want to negotiate the most favorable deals for them. Meanwhile, health insurance companies need to profit in order to have a viable business model. Unfortunately, consumers are usually caught in the middle.



In order to fulfill both of those missions, health insurance premiums are raised for the average policyholder. For the most part, rampant inflation in the cost of health care services has been unnoticed. However, healthcare reform has brought the issue to the forefront. Insurers need to make changes to the way they do business in order to survive in a climate where their rate increases receive greater scrutiny.



As a result, they have begun to fight back. In many areas, they have frozen their reimbursement rates instead of going along with the requisite annual increases. Some have even gone to the lengths of slashing existing payment rates.



There are wide disparities in compensation, because some hospitals and doctors' groups have more market power than others. Some of the disparity is due to newer and more extensive facilities, but a significant percentage of it cannot be otherwise explained.



Both sides are playing hardball. If physicians and hospitals feel that they are not receiving enough money, they may stop accepting patients with that health insurance. Hospitals are also steeling themselves for future cuts in Medicare and Medicaid reimbursement, which requires them to make up the difference through payments from private health insurance plans. Some hospitals may even be forced to close or merge. In those cases patients would suffer from smaller networks.



The health insurance companies have a better chance of clamping down on payment increases this time around. They have political and public support, which gives them momentum for upcoming contract negotiations. Across the political spectrum, it is a commonly accepted belief that hospitals should lower their costs by becoming more efficient. In addition, major employers are no longer blindly supporting the rate increases of famous doctor and viagra cialis online pharmacy pharmacy groups solely due to their reputations.