Hospital grows a pair, tells commercial insurer to get lost

The hospital where I did my residency, Abington Memorial Hospital in suburban Philadelphia (founded in 1913 in memorial to Montgomery County, PA socialites lost on the Titanic), has done something that I hope sets a trend. Magellan, the regional insurance administrator for mental health plans for Blue Cross and several Medicaid HealthChoices plans, has become less of the risk-taking explorer represented by its namesake and more of a miser of late. Hospitals are losing money on providing psych care to commercially-insured patients.

The hospital decided "were not going to take it anymore." Bravo. May more follow.

Mental-health contract expires at Abington

The hospital and Magellan disagree over reimbursement rates.
By Stacey Burling, Inquirer Staff Writer

March 6, 2007

A key contract for payment of mental-health services at Abington Memorial Hospital expired yesterday, leaving Independence Blue Cross and some Medicaid subscribers with the prospect of higher bills or disrupted care.

Hospital officials said Abington's reimbursement rates from Magellan Behavioral Health have been fixed since 2002. Magellan administers managed-care mental-health plans for Blue Cross and several Medicaid HealthChoices plans.

Last year, the hospital lost $1.2 million providing psychiatric care to Magellan patients, said Richard L. Jones Jr., Abington's president and chief executive officer.

The hospital provides a range of outpatient and inpatient psychiatric care ... Abington's chief financial officer said the hospital received about $1 million in reimbursements from Magellan last year. It asked for an increase of more than 100 percent to cover its costs.

Denny Moody, senior vice president of network services for Magellan, said Magellan initially proposed a 20 percent increase in reimbursement to Abington and then added "substantial increases above that."

Magellan could not justify more, he said. "We can say with absolute confidence that the rates Abington had received are market competitive," (market competitive. meaning, everyone gets paid the same ridiculous rates -- ed.) he said. "We weren't in a position where we could justify a significantly aberrant reimbursement rate to the marketplace." (yes, it might decrease profits - ed.)

[The hospital CFO] said mental-health payments traditionally had been poor. "I don't know that our costs are a whole lot different than other providers," he said. "It's an issue of us taking a stand that we're not going to lose money on commercially insured patients."

... Patients covered by Magellan can continue to receive mental-health treatment at the hospital, but could be faced with out-of-network deductibles and other charges.

The health plans affected by the contract expiration include Medicaid plans through AmeriChoice of Pennsylvania, HealthPartners and Keystone Mercy Health Plan. Independence Blue Cross plans affected are Keystone Health Plan East, Personal Choice, Personal Choice High Deductible, Keystone Point-of-Service, Keystone Direct, Personal Choice 65, Keystone 65 and Security 65.

"It's an issue of us taking a stand that we're not going to lose money on commercially insured patients." What a thought. Now, if only private practitioners grew the same cojones.

-- SS