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Insurers, hospital systems spar over terminations as members and premiums feel the squeeze
Summary
A PEB retreat panel heard that providers increasingly use termination notices and public campaigns as leverage in contract talks, a tactic panelists warned can raise premiums and put members between payers and hospitals. Value-based deals and better communication were suggested as remedies.
A panel at the Public Employees Benefits Board retreat examined a recent rise in provider termination notices and how those notices have become a bargaining tactic that can harm members.
Jean Buie, deputy director of the ERP division at the Health Care Authority, moderated a discussion with Denise Corcoran, vice president of contracting at Regence Blue Shield in Washington, and Ty Terry, director of provider contracting at Kaiser Permanente in Washington. Corcoran said plans increasingly receive termination notices “to open up those negotiations,” and that hospitals and provider systems sometimes push for large, single-year reimbursement increases that plans cannot absorb.
“It's not out of the norm now to get a very high double-digit ask for a one-year contract,” Corcoran said, warning that such demands drive up premiums and out-of-pocket costs for members. Terry agreed that the pandemic raised stakes in negotiations and said payers are pursuing alternative payment models to reduce transactional conflicts. “We really strive that those things are never a surprise and that we can forestall any contentious public involvement in the negotiation,” he said.
Panelists described unintended consequences from price-transparency rules intended to help consumers. Corcoran said publicly posted reimbursement rates have sometimes been used by providers to demand parity with higher-priced peers rather than to lower prices. “What we've actually seen is providers and hospitals using this as a negotiation tactic,” she said.
HCA staff and the panel recommended practical responses that keep members out of the middle: start renewals and relationship-building earlier, adopt more value‑based payment arrangements where appropriate, improve administrative simplification (for example, SmartAuth prior‑authorization tools), and coordinate messaging when a provider negotiation reaches public notice. Dave (HCA) noted that HCA participates in negotiations and aims to preserve continuity of care where possible.
The panel emphasized that public notices do not always mean a loss of access: many disputes resolve before a network change takes effect. But panelists acknowledged that the tactic creates real stress for members and called for clearer, timely communications when terminations are publicly announced.
