The problem of incorrectly denied medical claims has many repercussions throughout the industry. The obvious one is that when providers can't get paid, patients often get stuck holding the bag. The secondary issue is that when independent providers cannot get paid for services rendered, they look to join larger groups/health systems with greater resources and negotiating power with which to fight back against insurance companies. Problematically, consolidation almost always (still looking for a counter-example - please share in the comments if you've found one) leads to higher prices for consumers and lower quality care. The larger the provider, the more negotiating power it has with insurance companies, the higher the rates it can command, and since patient co-insurance is a percentage of the overall cost of services, costs to the patient go up. A Modern Healthcare article (https://bit.ly/45nBRtE) reported that merging hospitals raised prices by an average of 1.6% in the two years after a transaction, based on data from 322 hospital mergers between 2010 and 2015.
According to a 2020 article (Beaulieu, Nancy, Ph.D, Et. Al. “Changes in Quality of Care after Hospital Mergers and Acquisitions”. NEJM. 2020; 382: 51-59) in the New England Journal of Medicine, the quality of care at hospitals that have been acquired during recent consolidation of health care systems has stayed the same or gotten worse, and that hospital prices almost always increase as a result of market consolidation. The study examines outcomes from nearly 250 hospital mergers that took place from 2009 to 2013. Using data collected by CMS, they analyzed variables such as 30-day readmission and mortality rates among patients discharged from a hospital, as well as clinical measures such as timely antibiotic treatment of patients with bacterial pneumonia. Another article (Frakt, Austin. “Hospital Mergers Improve Health? Evidence Shows the Opposite”. The New York Times. February 11, 2019.) also reiterates that multiple studies show that as the market for hospitals has become more consolidated in recent years, health outcomes have become worse. According to many academic experts, there is three decades of evidence that suggest hospital mergers do not improve quality.
More than 200, or 20%, of completed mergers from 2002 to 2020 were anticompetitive based on the Herfindahl–Hirschman Index, a commonly used measure of market concentration. Yet the FTC, which is meant to protect consumers from monopolies, took enforcement action against only 13 of 1,164, or 1% of hospital mergers from 2002 to 2020.
In summary, help is not coming from the FTC/the government. It is up to the private sector to fix these problems. At Covered, one of our objectives is to restore the balance of power between payors and providers, and allow independent providers to remain independent.
