Mercy, one of the largest health systems in Missouri, is threatening to stop accepting Anthem insurance unless an agreement on how much the insurer reimburses hospitals for care is reached by the end of the year.
Chesterfield-based Mercy, which operates dozens of hospitals and hundreds of other outpatient locations in the region, has announced it intends to move out of the insurer’s network in January if Anthem does not agree to a new contract. The contract sets the amount of money the insurer pays hospitals for surgeries, checkups and the thousands of other services the health system provides.
Anthem officials claim Mercy is asking the insurer to pay too much money to cover procedures. Mercy officials said Anthem is putting too many administrative barriers in its contract, such as requiring providers to obtain the insurer's approval before doctors perform a procedure, and that makes it more difficult to treat patients.
“No health insurer should make health care harder, and we have just continued to see more and more administrative burdens placed on our patients, placed on our caregiver providers,” said Dave Thompson, Mercy's senior vice president of population health and president of contracted revenue. “Mercy is putting our foot down and saying, ‘no more.’”
Thompson said the insurer’s refusal to cover certain procedures and requiring prior authorizations, in which a provider must get an insurer’s go-ahead before prescribing a drug or conducting a procedure, “don't add value to the overall outcomes of patient care.”
Anthem officials said those measures are in place to keep costs down for the people and companies that buy insurance plans.
Anthem Missouri President Stephanie Jovicic said Mercy Is asking for unreasonably high rates.
“I believe this is about the rate increases,” she said. “This is about them asking for [a reimbursement rate] five times higher than inflation, and us trying to strike the balance of coming to terms on an increase while maintaining affordability and access to care for our members.”
Mercy officials said the claim that they want to charge five times the rate of inflation is false. Anthem officials said they’re confident in the number but can’t elaborate further.
Health systems regularly negotiate how much insurance companies reimburse hospitals for the care they provide to those insured by the company. Such negotiations are private, and details are rarely made public.
Hospitals with lots of patients or with many locations can leverage their size and reach to achieve higher reimbursement rates. Insurers can leverage their large patient networks to pay less expensive reimbursement rates to health systems.
Anthem is one of the largest health insurers in the state. According to the company, it insures more than 2 million Missourians, through employer-based coverage, Medicare and Medicaid plans and people who buy health insurance on the individual marketplace.
Mercy officials say dropping the insurer could affect 500,000 patients in the state.
Jovicic said 90,000 members in the St. Louis region have visited a Mercy provider, outpatient facility or hospital system in the past year.
Although threats of terminating contracts can result in both parties publicly trading barbs and causing patients to worry about their coverage, it’s rare that a contract between such large companies is dropped permanently, said Chris Garmon, a health economist at the University of Missouri-Kansas City.
“I think the likelihood that they will never again reach a deal is close to zero,” he said. “This is the way negotiations sometimes happen. It gets ugly and lots of bad things are sad about either side. At the end of the day there’s too much on the table to walk away from.”
If a deal is not reached, Anthem patients will no longer be in Mercy health system’s network starting Jan. 1.
Correction: An earlier version of this story misspelled Stephanie Vojicic's surname.
