The Wall Street Journal
April 2, 2010
WellPoint Unit Drops Stellaris From Network
By Avery Johnson and Suzanne Sataline
A unit of WellPoint Inc. dropped Stellaris Health Network, a four-hospital chain in Westchester, N.Y., from its network after Stellaris asked for a 15% increase in reimbursement payments from the health insurer.
Stellaris says it merely wanted the insurer to pay rates consistent with what it receives from other health plans in the market. "Our non-profit community hospitals can no longer subsidize the record profits of a health-insurance conglomerate," said Arthur A. Nizza, Stellaris's president and chief executive, in a statement. Empire asserts charges of overall profitability aren't relevant to this particular situation.
The decision will affect thousands of members of Empire BlueCross BlueShield, a WellPoint unit in New York, who use the hospital system. Empire has six million members in New York, and Stellaris has been one of its top 10 hospital systems in the state based on size and member utilization.
The failure to reach an agreement, which resulted in the contract being terminated late Wednesday, is the latest in a string of negotiations between hospitals and insurers that have gone hostile.
Comment: It is common to hear hospital administrators complain about low reimbursement rates from Medicare, yet how many terminate their participation in the Medicare program? And of course Medicare never unilaterally terminates a provider except when appropriate in cases of criminal fraud or incompetency that constitutes a hazard to patients.
Yet what happens when a private insurer is the payer? The decision to terminate a contract is strictly a business decision made based on market conditions, having much less to do with the value, quality or necessity of the services being provided, but much more to do with the oligopolistic leverage that the insurer has in the market. The private insurer, based purely on a business decision, is quite willing to disrupt the continuity of health care services for its own customers. And WellPoint/Empire says that their profitability isn't relevant when it makes these decisions!?
And what will the new reform legislation do to correct these blatant injustices? It will pour more taxpayer funds into the coffers of these intrusive middleman, providing them with even greater leverage in their negotiations with the health care delivery system.
Do we want a health care financing system that is designed to benefit the money managers, or do we want a financing system designed to be sure that health care is there when patients need it? If we favor the latter, then we need to dump the private insurers and adopt an improved Medicare program that takes care of everyone.
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