Clash Between Hospitals and Insurers Leaves Patients Stuck in the Crossfire

In a tense standoff that left 90,000 central Missouri residents without in-network coverage, University of Missouri (MU) Health Care and Anthem, a health insurance provider, found themselves at odds over a rate increase.

The dispute saw MU Health Care seeking a 39% rate increase over three years, while Anthem held firm at a 1%-2% increase. The impasse was so severe that Amy Frank, whose husband Allen needed follow-up care, had to work tirelessly on the phone to ensure her husband's continuity of care during the dispute.

As the weeks passed, the situation became increasingly dire. A growing number of Americans found themselves in a similar predicament due to contract disputes between hospitals and insurance companies. In fact, nearly one-in-five hospitals faced at least one case of public brinksmanship with payers (insurance companies) over the past five years.

The standoff between MU Health Care and Anthem reached a turning point on June 30, three months into the impasse, when the Missouri Senate Insurance and Banking Committee called the two sides in for a hearing. This intervention broke months of deadlock and prompted new proposals from Anthem.

A week later, the sides announced an agreement that was retroactive to April 1, the day the previous contract expired. The deal came as a relief to Amy Frank, whose relief was subdued due to the hours she spent on the phone to ensure her husband's surgery would be covered. She wondered if the two sides were trying to get people upset as a bargaining tactic.

The No Surprises Act, which took effect in 2022, offers some protections for patients whose provider drops out of network due to a contract dispute. However, hospital expenses continue to rise, growing 5.1% in 2024, outpacing the 2.9% inflation rate. Labor costs are the biggest driver, with advertised nursing salaries rising 26.6% faster than inflation from 2020 to 2024.

Elsewhere in the country, similar disputes were unfolding. Duke Health in North Carolina could leave the Aetna network unless the insurance company agreed to pay more favorable rates. In New York City, negotiations between UnitedHealthcare and Memorial Sloan Kettering Cancer Center missed a June 30 deadline.

The impact of Trump administration policies and health care consolidation may exacerbate such disputes. Trump administration policies could make such disputes more frequent as hospitals brace for about $1 trillion in cuts to federal health care spending. Health care consolidation has been booming nationwide for 30 years, with over 2,000 hospital mergers announced since 1998.

While mergers may lead to some efficiencies and benefits for consumers, they also reduce market competition and strengthen the hand of hospitals in negotiations with insurers. This dynamic can lead to higher costs for consumers and insurance companies alike.

In response to the out-of-network situation, MU Health Care spokesperson Eric Maze wrote in an email that the health system established processes and resources well in advance to facilitate continuity of care and reduce the burden for patients.

Despite the resolution of the dispute between MU Health Care and Anthem, the issue of contract disputes between hospitals and insurance companies remains a pressing concern for many Americans. As these disputes continue to escalate, it is crucial that both parties prioritise the needs of patients and work towards sustainable solutions.