Standing up to discriminatory practices by health insurers

As the Affordable Care Act continues to expand, it will provide medical coverage to millions of Americans who currently lack access to healthcare. The Affordable Care Act is especially important in the Hispanic community, because Latinos have the highest uninsured rates of any racial or ethnic group within the United States.

But for millions of Hispanics around the country, health insurance alone does not guarantee good healthcare. In America today, many Latinos lack access to doctors, hospitals and adequate medical care.  Over the last few decades, numerous hospitals serving Latino and other minority communities have been forced to close because they lose money and cost too much to operate. One of the primary reasons these hospitals are unprofitable is due to health insurers using hardball and inequitable negotiation tactics.

Health insurers will typically negotiate a fair reimbursement rate for treatments and procedures with a wealthy suburban hospital.  Insurers do so because a majority of patients at wealthy hospitals have health insurance, which gives the well-off hospitals the leverage to negotiate fair reimbursement rates for procedures like setting a broken arm or taking blood.

However, the same health insurance company will refuse to negotiate a fair reimbursement rate with a hospital in a poor neighborhood that serves fewer insured patients. Why? Because the health insurer thinks they can make more money negotiating down every single payment to that hospital rather then negotiating a fair price in advance. There is usually little the urban hospital can do about this unfair situation.  Poorer hospitals don’t treat a majority of insured patients, so they lack the bargaining power to demand higher payments.

One urban hospital though, which treats a majority of Hispanics, outside of New York City, has decided to fight back against this unfair business practice by the health insurers.

The Bayonne Medical Center in north-central New Jersey, has taken a drastic measure to try and force the health insurers to the bargaining table. Bayonne did this by treating those health insurance carriers who refuse to negotiate fair reimbursement levels as “out of network.” For those insurance companies, Bayonne would charge elevated prices.  This way, Bayonne could begin negotiations with those health insurers at a higher starting point, forcing them to pay a fair reimbursement. This tactic has brought some health insurers to the negotiating table to reimburse Bayonne at the same levels as they would a wealthier hospital.  In other words, these hardball negotiation tactics by Bayonne are working.

However, the critics of these practices fail to understand – or intentionally ignore – that the insured patients are not paying higher fees, their health insurance companies are.  That is whom these fees are targeted at. Insured patients only pay their deductibles, regardless of what the hospital charges.

A few years ago, the Bayonne Medical Center was in bankruptcy and on its way to closing until the new owners bought the struggling hospital and implemented this strategy. If we want to ensure that Hispanics in this country have access to medical care, there must be hospitals in their communities. If a hospital like Bayonne has to take drastic steps to bring insurers to the bargaining table, then so be it. 

Instead of criticizing Bayonne, our elected leaders and the media should be asking why health insurers will reimburse wealthy hospitals at one rate, and poorer hospitals at a much lower rate.  This is discriminatory, because it disproportionally hurts Hispanics and other minorities as well as betrays our democratic principles of equal treatment and fair and ethical business practices.

Reyes represented Texas’s 16th Congressional District from 1997 to 2013.