WASHINGTON (AP) — The Justice Department alleged Monday in a lawsuit that Michigan Blue Cross Blue Shield is discouraging competition by engaging in practices that raise hospital prices, conduct an assistant attorney general vowed to challenge anywhere else it is found in the United States.
Dispirited and exhausted physicians often assume that insurance companies are the source of all evil in health care. While there are certainly examples of bad insurer behavior lending support to this assumption, reality is more complex.
I think it is fine and reasonable for the Department of Justice to check out 'most favored nation' clauses in contracts between insurers and hospitals - the idea certainly smells fishy and deserves investigation, but before practcies break out the party favors consider the forces at work in any given market.
The big actors on the health care delivery side are hospitals and hospital systems. Doctor networks used to be the third big player but that force is significantly diminished as so many doctor practices are now owned by hospitals.
Like any human enterprise hospitals and hospital systems run the gamut from beneficent to malignant. Even well meaning hospitals struggle with the idea of supporting improved population health through more robust primary care - this concept is in direct oppostition to a business model that rewards hospitals every time someone gets really sick or hurt.
Imagine a hospital taking its slim profit margin and using it to fund the full scope of effective primary care. The resulting drop in emergency room utilization and hospitalization is a double-whammy to hospital finances, yet this is the core idea behind Accountable Care Organizations.
Some smart hospitals and systems see the writing on the wall. Some will be early adopters and figure out that doing so will increase their primary care market share (doing well by doing good), others will fight it tooth and nail by metastasizing micro emergency rooms through communities and marketing 'centers of revenue excellence.'
Back to the DOJ move on Michigan BCBS. If you hobble one side of negotiations in a market you hand the other side a huge advantage. Given the nice work that Michigan BCBS has done to support effective primary care, it will be interested to see what hospitals do with their new leverage.
How many will use this opportunity to pull back primary care resources that reduced unnecessary emergency room and hospital use and therefore hurt the hospital's bottom line? This is where you might find some of the pull-back if a hospital or system chooses the low road:
- Increased volume-based productivity targets for primary care providers
- Reduced or eliminated population health functions
- Health coaches providing outreach for patients who have gaps in health care
- Staff to manage database used to help people keep on track with preventive needs and/or chronic conditions over time
- Protected staff time used for quality improvement
- Care coordination staff making sure patient care isn't dropped between the silos in which we work
- Stopping or pulling back on non-visit based care (email, phone, video, etc)
Of course even a beneficent hospital might be forced to engage in some of the behaviors listed above. The sad thing is that payment policies dictate most of our behavior. The current payment models reward volume not care or quality. BCBS of MI has been working to change that. I hope with this change in the Michigan market that work can continue.