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By Bob Hennelly
In America, healthcare delivery to patients and hospital finance are strategically compartmentalized to limit transparency. This is done to keep the consumer in the dark about pricing before services are rendered—all so that providers and for-profit insurers can make a killing.
Behind the scenes, hospitals and insurance companies battle each other over the billions of dollars in profit this dark art generates.The collusion has helped drive up U.S. healthcare costs so high, according to the Commonwealth Fund, we now “spend twice as much per person on health as peer nations.”
Nevertheless, neither the hospitals nor the insurance companies need to show their work—and in a political system where money controls policy and our politics, its likely to stay that way.Our predatory healthcare system is just like three-card monte, and if you need to go through an insurance company the house always wins.
SLEIGHT OF HAND
This shady dealing was on full display last month after 32BJ SEIU—the largest union of property service workers in the nation—went public with some of the behind the scenes, last minute drama surrounding their negotiations with health industry giant Aetna.
By way of background, a few years back, 32BJ SEIU decided to strip New York Presbyterian hospitals of their in-network designation for their plan that covers 210,000 people because of what the union insisted was the healthcare provider’s exorbitant pricing.
According to the Wall Street Journal, Peter Goldberger, who leads the union benefits fund “was on the verge of completing a new health-insurance deal with Aetna” when he learned the “union fund would have to pay the powerful New York-Presbyterian hospital system $25 million—to stay out of its plan.”
“Aetna told the union fund, Goldberger says, that the price for excluding New York-Presbyterian from its network would be the $25 million, which the hospital system argued 32BJ owed it for past medical services,” the Wall Street Journal reported. “Otherwise, Aetna couldn't offer the plan the union fund wanted.”
Aetna, which is a unit of CVS Health, “declined to comment on discussions with prospective customers,” when pressed further.
For its part, New York-Presbyterian told Work-Bites it had “no knowledge or comment on 32BJ’s RFP or their negotiations,” while also denying ever having “proposed such an arrangement to 32BJ.”
“We do not know what was said in discussion between Aetna and 32BJ,” a New York Presbyterian spokesperson said in an email.
"We were totally shocked," Goldberger told the Wall Street Journal. He also said the union fund hadn't previously heard from New York-Presbyterian about the disputed charges before Aetna referenced them. "That's just not how business is done,” he said.
“Big, high-profile hospital systems can command premium rates and favorable terms in their negotiations with private insurers, and sometimes deploy bare-knuckle tactics to get what they want,” the Wall Street Journal asserted. “Among hospitals' demands can be guarantees that they will be included in all of an insurer's networks, even if a client doesn't want them.”
HEALTHCARE ROLLER COASTER
Back in March, tens of thousands of Aetna subscribers who rely on the New York-Presbyterian system for care were faced with the very real prospect of losing their coverage because the insurance company and health system had not reached a deal.
“The health system threatened to cut ties with Aetna in recent weeks over stalled contract negotiations and sent patients letters warning them that they could lose coverage for their health care providers,” the Gothamist reported. “New York-Presbyterian said in a Feb. 26 letter that Aetna had ‘presented an unreasonable offer’ and urged patients to talk to their employers about other insurance options.”
The union expects the $25 million payment to continue to be an issue even though they’ve opted to stay with Anthem Blue Cross Blue Shield.
Last week, dozens of 32BJ SEIU members rallied outside New York-Presbyterian in Washington Heights to protest what the union asserted was the provider’s “latest attempt to deny quality, affordable healthcare to hundreds of thousands of union family members.”
They were joined by elected officials, including New York City Comptroller Brad Lander.
“New York-Presbyterian’s exorbitant $25 million demand from the 32BJ Health Fund puts hundreds of thousands of New Yorkers at risk of losing their doctors, nurses, and vital medical services,” he said. “These union workers keep our city running smoothly by maintaining our apartments and schools, ensuring the security of our buildings, cleaning our offices, and providing essential support services, and they deserve fair and affordable healthcare. We call on New York-Presbyterian to do the right thing for these workers,”
Manny Pastreich is the president of 32BJ SEIU, representing 175,000 workers in 11 states and Washington, D.C. The union leader disputes that New York-Presbyterian was owed $25 million for the underpayment of emergency medical care given his members.
According to him, after 32BJ bounced New York-Presbyterian from being in network, the provider sent a letter urging union members not to hesitate using the hospital system in the event of an emergency.
“We have paid them millions of dollars—$18 million—with less than a million dollars of what we paid in arbitration permitted by the federal government,” Pastreich told Work-Bites. “We heard nothing about this until the final days [of the negotiations] when we were getting ready to finalize with Aetna.”
32BJ ended up staying with its current carrier Anthem Blue Cross Blue Shield, whose contract with New York Presbyterian doesn’t lapse until the end of this year.
Pastreich also told Work-Bites the union’s decision to kick New York-Presbyterian out of its network back in 2021, had saved the union’s fund $30 million a year. Back in 2022, an analysis by 32BJ’s Health Fund documented that New York-Presbyterian was among the six largest non-profit systems that charged exponentially higher prices than the city’s municipally-owned hospitals, or even the top hospital systems in Boston.
TIFFANY PRICES
“For example, delivery of a baby by Cesarean section typically cost more than $45,000 at New York-Presbyterian, compared to $27,000 at Boston Medical Center, and $18,000 at a New York City Health + Hospitals facility,” the Empire Centerreported.
“That’s $30 million [in savings] that’s now going into our members’ pockets” through a series of breakthrough contracts where the union was able to make unprecedented strides in wages, benefits and pension benefits “during very hard times,” Pastreich said.
“If we [union and insurance carrier] were dealing with New York-Presbyterian together directly, at least we would know where we stand and what the issues are—but the reality is we are dealing with New York-Presbyterian through Blue Cross or through Aetna and they have many issues that are going on between them about—not only us, but all their other customers.”
32BJ, working in coalition with DC 37, the UFT, as well as local community groups has been pressing at the municipal and state level for legislation that would provide greater hospital pricing transparency because hospitals prices are the biggest cost driver.
“The big picture,” Pastreich said, “is we have all been fighting to make sure healthcare is affordable. And as part of that fight, we have passed legislation on the state and city level around contracting practices and transparency, so we can understand what we are being charged, and come up with plans to bring down these costs. So much of this is because of hospitals—for most plans, 40 to 60 percent of their costs is for hospitals.”
The 32BJ leader further said that long term, there should probably be a single payer national healthcare system in this country.
“But the reality for the last 60 to 70 years for working people, is that healthcare comes through their jobs,” Pastreich said. “So, it is our responsibility to our members who we represent in the workplace and beyond to make sure they are getting high quality and affordable health insurance.”
He continued, “We do need a better system for working people. Even for our members who are some of the best paid for what they do, a huge percentage of their total compensation is going to healthcare and pension. It is a system that burdens working people to a high degree—and then you have to talk about the tens of millions of people who still don’t have healthcare even with Obamacare [the Affordable Care Act].”
LAISSEZ-FAIRE GEORGE
Healthcare consumer advocates point to former Governor George Pataki and his 1996 decision to end the state’s long-standing practice of regulating and setting hospital rates. That decree, they say, has proven disastrous with the closures of dozens of hospitals and ever-skyrocketing costs.
“The Governor said that ending the state's decades-old practice of setting rates for services provided by hospitals would allow competition to push down costs and offer new incentives for people to seek cheaper treatment outside of hospitals,” the New York Times reported at the time.
"We are just quite confident that this will lead to a stronger and healthier health care system as we move into the next century," Pataki told reporters.
Healthcare access advocates accurately predicted Pataki’s so-called “free market” strategy would lead to hospital consolidation and closures that would be felt hardest in at risk communities of color that were already medically underserved.
In 2005, Pataki appointed Stephen Berger to lead the Commission on Health Care Facilities in the 21st Century, a panel that was to shape a state strategy to contain and even rollback what the state spent on healthcare. It took aim at dozens of hospitals.
Between 2003 and 2020, New York State closed 41 hospitals, 18 of them in the five boroughs, according to David Robinson, with Lohud.com.
As David Brand reported for the Queens Daily Eagle at the start of the COVID pandemic that would go on to kill close to 80,000 New Yorkers—those Pataki-era moves did not stand the test of time.
“The Berger Commission concluded that unprofitable hospitals had to shut down or get absorbed by larger medical systems, precipitating a spate of closures throughout New York City over the next decade. The hospital shutdown plan has faced renewed scrutiny as the city and state build temporary hospitals in a race track parking lot, a tennis stadium and a convention center. (It was assailed by local communities and healthcare experts from the very start.)”
IS 32BJ BETTER OFF?
As for 32BJ having to stick with Anthem Blue Shield over Aetna—the union may have dodged a bullet.
The loss of the 32BJ business is only the latest bad news for Aetna, which is owned by CVS. Last month, New York City civil service retirees won yet another round in court in their battle to resist Mayor Adams and the Municipal Labor Committee bid to force them off their Medicare and on to the for-profit Aetna Medicare Advantage.
In October 2022, the New York Times and Kaiser Health News published extensive investigative pieces which raised alarming questions about the nation’s largest Medicare Advantage insurers including Aetna. Nevertheless, a majority of Medicare aged Americans are now enrolled in a Medicare Advantage plans.
“Eight of the 10 biggest Medicare Advantage insurers—representing more than two-thirds of the market—have submitted inflated bills, according to the federal audits,” the Times reported. “And four of the five largest players—UnitedHealth, Humana, Elevance and Kaiser—have faced federal lawsuits alleging that efforts to over diagnose their customers crossed the line into fraud.”
“The fifth company, CVS Health, which owns Aetna, toldinvestorsits practices were being investigated by the Department of Justice,” according to the newspaper.
“A study from the Kaiser Family Foundation, a research group unaffiliated with the insurer Kaiser, found the companies typicallyearntwice as much gross profitfrom their Medicare Advantage plans as from other types of insurance,” the Times reported.
The bottom line, the Times observed, was that Medicare Advantage “a program devised to help lower health care spending has instead become substantially more costly than the traditional government program it was meant to improve.”
Following the critical coverage, and a growing grassroots movement that maintains Medicare Advantage is neither Medicare or an advantage, the Biden administration started “recovering improper payments made to insurance companies in Medicare Advantage through audits,” according to a 2023 U.S. Department of Health and Human Services statement.
SLASHING JOBS AND STILL MISSING REVENUE PROJECTIONS
Last month, Aetna’s parent, CVS Health scaled back its earnings projections for the second time this year “based on rising medical cost trends, especially among the Medicare Advantage population,” according to Beckers Hospital Review.
In 2023, CVS Health announced it planned on laying off 5,000 corporate employees.
“CVS just announced earnings and it was a blood bath on Wall Street because investors thought Aetna had paid too many Medicare Advantage claims and it sent the stock falling like a rock and their CEO and CFO said they’d be slashing benefits—they would be pulling out of some markets and importantly renegotiating with their employer customers to reprice their Medicare Advantage Plans,” Wendell Potter, former health insurance executive turned universal healthcare campaigner, told WBAI recently. “You can be certain the City of New York will be facing more difficult negotiations because Aetna’s under a lot of pressure from investors to increase their profit margins.”
