Connecticut's largest hospital network and largest insurer are in the midst of a contract dispute.
It's a type of clash that's become familiar, but it's occurring in a new context, against the backdrop of significant changes in health care: the consolidation of hospitals into larger networks and efforts by insurers to change how they pay for care.
The dispute pits Hartford HealthCare, the parent company of five Connecticut hospitals, against Anthem Blue Cross and Blue Shield. The two say they'll sever ties Oct. 1 if they can't reach a deal on new contracts.
That would mean the five hospitals -- Hartford, Backus, Windham, MidState Medical Center and The Hospital of Central Connecticut -- would be out of Anthem's network, and Anthem customers would likely face significantly higher costs to get care at one of those facilities. (Coverage of doctors who are part of Hartford HealthCare Medical Group would not be affected.)
At stake in the negotiations: How much hospitals get paid and whether they'll participate in the insurer's network. And the outcome will likely have an effect on consumers' wallets, since the price of care is a key factor in the cost of insurance premiums.
Here are some things to know about the dispute and some of the factors behind it.
These kinds of disputes usually get resolved
This isn't the first time a hospital and insurance company have threatened to cut ties, and it's unlikely to be the last. Four years ago, Hartford and Windham hospitals were locked in a dispute with Anthem and threatened to leave the insurer's network. The two sides reached a deal at the last minute.
Other hospitals and insurers have also notified patients in the past that they might sever ties, but ultimately settled on new contracts before the deadline. In a handful of cases, hospitals left the insurance companies' networks for a time before reaching new deals.
But disputes could get more complicated
There's been a big change in the health care landscape since the last Hartford-Anthem dispute: More hospitals have joined larger chains, giving them more leverage in negotiations. Hartford HealthCare now includes more hospitals than any other health system in the state (although the Yale New Haven Health System operates more beds).
Some people worry more bargaining power by hospitals will translate to higher prices for care.
"The thing we've always been worried about is that [with] greater consolidation, the large systems could use that bargaining power and the fact that they have so many lives attached to their system to try to extract more than would be otherwise a reasonable rate under the circumstances," state Healthcare Advocate Victoria Veltri said.
And when more hospitals belong to one chain, Veltri added, consumers have fewer places to go if the hospital group leaves their insurer's network.
Hospitals are getting stronger in negotiations, and more sophisticated as they build new types of organizations designed to adapt to changing payment models, said Angela Mattie, a professor of health care management at Quinnipiac University.
Consolidation among hospitals occurred in part as a reaction to consolidation among insurers, said Ellen Andrews, executive director of the Connecticut Health Policy Project, who worries that it will lead to higher prices.
"The insurance companies are trying to get more leverage by consolidating, so that makes the hospitals and provider groups consolidate to get more leverage back," Andrews said. "But consumers and payers aren't getting more leverage. We're just losing it."
Insurance companies are trying to change the way they pay hospitals
There's another big change going on in health care, related to how care gets paid for. Both Anthem and Hartford HealthCare have indicated that one factor in contract talks has been efforts to tie pay to performance or "value."
Right now, most health care providers get paid on a "fee-for-service" basis. That is, they get paid for every patient visit, test or procedure. And most payments to doctors aren't based on the quality of their care. If you stay healthy and don't need medical care, your doctor doesn't see any financial gain.