February 17, 2020

Contract negotiations between Anthem, Parkview underway

Human Resources – Benefits has been notified of ongoing contract negotiations between Anthem and Parkview Health System, which is a network of more than 80 community hospitals and clinics in northern Indiana and northwest Ohio and serves many Purdue employees. Anthem recently gave Parkview notice of its intentions to terminate its contract effective April 29 if an agreement is not reached.

Negotiations were spurred in Anthem’s attempt to advocate for and reduce costs for those using care via Parkview. In 2017, the Employers’ Forum of Indiana asked the RAND Corporation to analyze insurance claims data (mid-2013 to mid-2016) to provide insight into the prices employers pay to hospitals in Indiana. Prices are defined as the amount paid per service by both the health plan and the patient. The goal is to provide information to help employers become better-informed purchasers of health care and stronger advocates on behalf of their employees.

The pilot study (round 1) found that:

  • The overall average price for inpatient hospital care in Indiana is 2.17 times what Medicare would have paid for the same services. The most recent study using national data on payments for inpatient hospital care found the average price paid by private health plans was 1.75 times the Medicare payment rate.
  • The price paid for hospital outpatient care in Indiana is 3.58 times what Medicare would have paid for the same services. Although there are no studies to benchmark the cost of such care nationally, other research has suggested that Indiana has high outpatient hospital prices for privately insured patients.
  • The relative price of hospital care in Indiana rose sharply over the three-year study period.
  • Parkview Health charged private insurance companies about four times what the federal Medicare program paid for the same care.

The full RAND study can be reviewed here.

Additionally, the Employers’ Forum of Indiana has made available a National Hospital Transparency Report Supplement (May 2019), which provides detailed data from the transparency initiative. Per the supplement, Parkview Health is the second highest in the state in regard to hospital system relative price rank. In looking at the relative prices, which represent the allowed amount paid by the private insurance plan as a percentage of what Medicare would have paid to the same hospital for the same services, Parkview Health’s relative price for inpatient and outpatient services is 395 percent. The supplement is available for download from the Employers’ Forum of Indiana’s website.

“We support Anthem in this negotiation process,” said Candace Shaffer, senior director of benefits in Human Resources. “Our goal continues to be helping the Purdue community be smart health care consumers, and through the Healthy Boiler initiative we are making strides in adding and enhancing programs and opportunities to do so. However, the fact that hospital services in Indiana are so high and continue to rise challenges what we are trying to accomplish for the employees we serve. Anthem is attempting to support a core goal of the RAND study by holding hospital systems accountable for their prices, which in turn will benefit our employees’ mental and physical health and their financial wellness. Reaching a fair agreement on behalf of our employees is what Anthem is after, and we value and appreciate their efforts.”

As Human Resources – Benefits has reported over the last couple of years, Purdue’s health care costs for both employee and the University continue to rise. In 2014, total health care costs for the University were $155 million (employee cost of $49.3 million; University cost of $106 million) and in 2018 that total cost jumped to $185 million (employee cost of $49.2 million; University cost of $135 million). Purdue is not alone; every employer across the United States has been affected while almost every household has to deal with medical costs that form a big part of their overall yearly expenses. 

“The employer-led transparency RAND pilot study in Indiana was the first of its kind in an effort to combat some of the rising costs everyone is experiencing,” Shaffer said. “Having access to ongoing data and resources for employers – like Purdue – to be better able to work on behalf of their employees in terms of health care costs is essential and possible via studies and reports like the RAND study.”  

More information will be shared with employees as the Anthem-Parkview negotiations progress.

Questions can be directed to Human Resources at 765-494-2222, toll free at 877-725-0222 or via email at hr@purdue.edu.

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