A contract dispute has left some Brownsburg residents with little choice but to look elsewhere for the health care services they need.
Rate negotiations between Hendricks Regional Health and Anthem stalled when the entities couldn’t come to an agreement on reimbursement rates for certain services at the county’s Brownsburg hospital.
Hendricks Regional Health is a county-owned network of hospitals and health care service providers. Its primary facilities are in Danville and Brownsburg, but smaller operations dot the county. All the entities within its system are in Anthem’s network, except for the Brownsburg hospital at Ronald Reagan Parkway and Interstate 74.
Hendricks Regional Health Chief Strategic Officer Gary Everling said the company began negotiating with insurers months before the $50 million, 100,000-square-foot hospital opened on Jan. 8. Contractually, they had to notify them that they were adding a new facility. Most, he said, kept the same terms they had with the system for its other locations without fuss, but Anthem didn’t. It returned with an “unsustainable” proposal, far less than the rates it paid for the same services at the Danville hospital, he said.
“Despite our efforts to negotiate in good faith with Anthem, they just haven’t,” said Everling. “We’re not asking for more than what we charge anywhere else.”
The staffing ratios at the Brownsburg facility are the same as they are in Danville, the same board-certified ER physician group covers the emergency department, it has the same adult inpatient physician group and the nursing staffing ratio is the same, he said.
But Anthem saw it differently.
“It has only six inpatient beds and no intensive care unit or surgical capabilities,” stated senior Anthem spokesman Tony Felts.
“We have made fair contract offers that reflect the limited services available at this facility. It is not in the best interest of our consumers and the affordability of health care to compensate this facility at the same level as a full-service hospital.”
Hendricks Regional Health’s Danville hospital is more than 600,000 square feet, has 127 inpatient beds and provides both surgical and intensive care, for comparison.
While the contrast is striking, University of North Carolina health care reimbursement professor and senior research fellow George H. Pink said he isn’t aware of any standard for what constitutes a full-service hospital.
Almost 37,000 people have gone to the Brownsburg facility since it opened, according to company officials. They estimate that a couple thousand customers were affected by some services being out of network.
Inpatient care, cardiac testing and radiology (including mammography) and rehabilitation services such as physical and occupational therapy are out of network for Anthem members at the site. Individual physicians, immediate care and lab services remain in network.
For now, they’re referring them to other providers under the Hendricks Regional Health umbrella.
“There’s a lot of options we can send them to, and we do that just to make sure that they’re not out of network,” Everling said.
The hospital network is working to make sure patients who need to be referred to another provider can go without having to wait for services, Carrie Meyer, Hendricks Regional Health strategic communications director, said.
How It Works
When a hospital negotiates a rate with an insurer, it’s making an agreement for how much it will be paid for a procedure or service. These rates can vary from one insurance provider to another and sometimes rely on other factors, such as whether it is inpatient or outpatient care.
Hospitals prefer that insurance companies pay a higher percentage of their fees because that’s how they make money. Insurers prefer to pay less because that lowers costs for their members. That’s why people shouldn’t think of health insurers as the enemy, said Mark Norrell, Indiana University health care management policy professor, even if they can be frustrating at times.
“We want to think of Anthem as doing this in the best interest of the individuals that hold Anthem health insurance because the lower they can negotiate payment rates, the less expensive my health care is when I go and see an in-network provider,” he said.
The problem is imbalances of power can lead to one-sided deals, and that can be catastrophic for small systems or nonprofits that often operate on 1% to 3% margins.
“Bottom line: It all depends on who needs who the most,” Norrell said.
What It Means
For now, Hendricks Regional Health is referring patients with Anthem insurance who need a service that’s outside of their network at Brownsburg to other facilities in the system. It’s managing staffing levels to accommodate those referrals, Meyer said.
Hendricks Regional Health is asking Brownsburg residents covered by Anthem to reach out to the insurer and ask it to reconsider, Everling said.
“We’re on their side, and we won’t give up until it’s done,” he said.
Originally published in Hendricks County ICON, 2018. Republished here for archival and portfolio purposes.