Hospitals complain of varying insurance payments

Hospital executives in Tennessee are complaining that insurance contractors for TennCare, the state program for the poor, are paying four times as much to certain hospitals as to others for outpatient services, The Tennessean reported. Even more, new rules expected this summer could curb existing payments by setting upper and lower limits on hospital payments, Commercial Appeal reported.

The state government review of TennCare payments to hospitals two years ago found "significant variations" in hospital payments, according to Commercial Appeal. The difference amounts to millions in some cases, The Tennessean reported. For example, while Methodist University Hospital in Memphis received an average reimbursement of $592 per patient, its rival Baptist Memorial Hospital averaged $647.

The variations could come from several factors. "For example, facilities that are trauma centers, or have medical equipment that is unique, or provide specialized services, such as pediatric specialty care, may receive higher reimbursement rates," Mary Danielson, director of corporate communications for BlueCross BlueShield of Tennessee, said in an email to The Tennessean.

The disparities in hospital payments arose when TennCare proposed a cost-saving rule in which no hospital should receive more reimbursement for procedures than what Medicare pays. The proposal revealed otherwise confidential (and varying) rates between institutions.

However, some argue the disparities are there for a reason. Chris McLean, Methodist Le Bonheur Healthcare's chief financial officer, said in the Commercial Appeal article, "Yes, disparities exist and they should exist. If not, there's something wrong with the process." He added, "Because negotiated rates are what it's all about and that's between (managed care organizations) and the hospital, and it's not and should not be shared information due to antitrust (regulations)."

For more information:
- read the Tennessean article
- read the Commercial Appeal article

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