Bridging the Payer-Provider Divide: Excerpt from March Cover Story

The growing tension between payers and providers is no secret. And it's forcing CFOs to take action.

The following is an excerpt from our March cover story.

Providers have been fed up with payer behavior for decades; many have suffered financial turmoil from payer tactics, smearing contention across the picture of healthcare for everyone involved.

About 84% of health system CFOs cite lower reimbursement rates from payers as the top cause of low operating margins, according to a study published by the Healthcare Financial Management Association (HFMA).

Among HFMA survey respondents, 75% have also added more FTEs to handle insurance denials, and 63% have added staff to follow up on accounts receivable, both of which eat into a health system's budget just to keep up with payers.

Over the last few years some components of this dynamic between payers and providers have shifted, but arguably, not enough. There have been some wins, like increased transparency laws and modernized care models, but there have also been some losses, — and lawsuits — like payers using AI to inappropriately deny claims, fanning the flames of these disputes.

Even as recent as this month, health systems are opting out of settlements and choosing to fight back against payers with legal action. Dozens of health systems are currently suing Blue Cross Blue Shield for paying healthcare providers, "far less than they would have been paid in a competitive market."

Mayo Clinic is also currently suing Sanford Health Plan over $700K in unpaid medical bills for a patient that was treated over two years ago. Mayo said is not seeking payment from the patient.

It's instances like these that bring to the surface the strife between payers and providers, and patients that suffer.

Resentful Consumer Outcry

The murder of United HealthCare CEO Brian Thompson shone an uncomfortable, blinding light on the contention within healthcare; not between payers and providers—between consumers and the modern healthcare system.

The online backlash after Thompson's murder was nothing to shrug off, but in many ways, that's exactly what happened. Consumers used the opportunity to fire back over the struggles of obtaining affordable healthcare through today's insurers, painting a stark silhouette of spite against a horrific tragedy.

The harsh, inappropriate backlash from consumers took over the narrative for a brief second, but despite its widespread intensity, despite the decades of patients' rage that led to this horrific outcome, it didn't spark any significant change to healthcare or healthcare policies, it only brought about tension. Under this constant tension, cracks form, and systems break down.

"Though an unjustifiable action, we must recognize that there is a lot of friction that a lot of people, both payers and providers, know is there," said Rick Gundling, Senior Vice President for Content and Professional Practice at HFMA and a former CFO.

This incident was tragic and will always be tough to face. But the industry shouldn't let the discomfort of the situation muddy the waters of the underlying sentiment: many people have died because of denied care.

"It makes no sense to me that there is no true system that captures physical harm to enrollees related to denied or delayed prior authorizations," says Kurt Barwis, CEO of Bristol Hospital, registered lobbyist in Connecticut, and former governor of the American College of Healthcare Executives. "Healthcare is supposed to be evidenced based/do no harm … yet the use of prior authorizations gets a complete and total pass?"

According to a report by the Kaiser Family foundation, 19% of in-network claims and 37% of out-of-network claims were denied in 2023, for a combined average of 20% of all claims. All of this is not to say that payers undoubtedly carry all the blame, but rather that the American healthcare system has failed many, many people when they needed it most.

CFOs stand in a unique position that enables them to use their voice and expertise to advocate for policy reform. Read the full story to understand how, as well as the best strategies for seizing the opportunity.