Hospital Patients are Like Casino ‘High-Roller Whales’ – Hospital / Insurance Negotiation Explained.
Just like casinos are dependent on ‘High-Roller Whales’ to meet their revenue and profit targets… hospitals rely on High-Cost Inpatient Stays for Patients with Employer-Sponsored Insurance as their ‘Whales.’
There are two reasons for this Patient ‘Whale’ Dynamic:
1. Hospitals negotiate ‘Provider Stop-Loss’ Contract Clauses that reimburse at approximately 70% of billed charges once and certain ‘threshold’ of billed charges are met. For example, a hospital will have a provider stop-loss contract with an insurance company for a coronary artery bypass graft (CABG) for a fixed reimbursement of $80K for billed charges up to $200K.
However, once billed charges EXCEED $200K, then the hospital is reimbursed 70% of billed charges. Therefore, if billed charges for a CABG are $800K, then the hospital will be reimbursed $560K… 7X the originally contracted rate.
2. Hospitals intentionally ‘tailor’ their Chargemasters so that billed charges almost ALWAYs exceed the threshold level that has been negotiated in the ‘Provider Stop-Loss’ contract. Employers are NOT going to be able to stop hospital systems and insurance carriers from entering into these sorts of contract terms.
Solution: Keep employee health plan members out of hospitals that have ‘Provider Stop-Loss’ contracts as much as possible through
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