The ‘sausage factory’ of health insurance negotiations in Mass.

Posted inside Southbridge’s Harrington Hospital, a sheet of paper informs patients of all the insurances that aren’t accepted.

There are more than 40 plans on the list, some associated with big-name insurers, such as Aetna, Blue Cross Blue Shield and Cigna. The hospital doesn’t accept Wellsense Connectorcare or Tufts Health Direct, some of the lowest-cost plans offered on the state’s marketplace.

Several plans on the list are small, niche and geographically irrelevant. But to the naked eye, it’s a lengthy catalog.

“As we are a noncontracted site, this means that your insurance plan will not cover this service for you,” the notice tells patients. Emergency department and labor/delivery services are exempt.

Owned by Worcester-based UMass Memorial Health since 2021, Harrington Hospital isn’t unusual in the insurance plans it doesn’t accept.

But the list that greets patients inside the facility represents a larger enigma of U.S. health care, where patients are forced to navigate the web of inconsistent and complicated networks between hospitals and insurers.

“This is ridiculous,” said Trish McCleary, a Sturbridge resident and survivor of chronic Lyme disease, who gets her health care at Harrington Hospital. “I don’t know if it’s the insurance companies not willing to pay for services or if it’s the hospital. Whatever the issue, I think our legislators need to be involved.”

In response to an inquiry from MassLive, UMass Memorial Health said in a statement: “The sign was posted to ensure our patients are aware of insurances accepted or not accepted by UMass Memorial Health. We believe it important to keep patients informed ... Insurances that are accepted can also be found here."

Recent health insurance bargaining in Mass.

The nuts and bolts of insurance negotiations — and the chaos it can cause patients — was on full display at the end of last year as Point32Health, the state’s second-largest insurer, struggled to reach new contract agreements with UMass Memorial Health, Boston Children’s Hospital and Tenet Healthcare Corp.

Negotiations with Tenet, which owns Saint Vincent Hospital in Worcester, ended favorably in an 11th-hour deal before Jan. 1. Neither party released details of the contract.

But at UMass Memorial Health and Boston Children’s, more than 20,000 members of Tufts Health Direct, owned by Point32Health, lost in-network coverage. As a result, they’ll have to find new providers or insurance, or face out-of-network costs.

In Western Massachusetts, Wellpoint Insurance and Baystate Health appeared to be at a stalemate last year, but they ultimately reached an agreement in mid-December. The unfolding situation merited attention from Springfield Mayor Domenic Sarno because thousands of city employees are insured by Wellpoint.

The quarrel between parties is usually the same: they point fingers at each other. Hospitals claim insurers are low-balling reimbursement rates necessary to provide adequate care that’s increasing in cost, while insurers say upping rates will result in premium increases for their members.

In 2022, total health care spending in the state increased by nearly 6% from 2021, for a total of $71.7 billion, according to the Center for Health Information and Analysis. Some experts argue the true total is much more.

“What’s happening today is there is such a focus on cost and affordability,” said Lora Pellegrini, president and CEO of the Massachusetts Association of Health Plans. “Plans are hearing from their customers and consumers, ‘We can’t pay any more.’ And in the meantime, hospitals are coming out of COVID, coming out of a high inflationary period, and they need higher reimbursements to cover their costs. That’s why we’re getting showdowns between insurers and hospitals.”

Dr. Eric Dickson, UMass Memorial Health’s chief executive, told the Boston Globe in October that, had it accepted Point32Health’s proposed reimbursement rates, the hospital system “would have lost money on every patient we saw and every patient we hospitalized and every patient we operated on.”

Meanwhile, Point32Health contended UMass Memorial Health would not accept “the rate necessary to offer affordable coverage to (Tufts Health Direct) members who receive premium support due to low income.”

UMass Memorial Health would not answer specific questions from MassLive about the list at Harrington Hospital showing which insurances it doesn’t accept. Instead, a spokesperson directed MassLive to a section of the health system’s website, which, under its list of accepted insurers, notes that “participation (is) limited to select products/providers.”

That means while UMass Memorial Health is generally in-network with Aetna, for example, it doesn’t have an agreement in place for some of its “products,” including Aetna Savings Plus and Aetna QHP plans.

Insurers often provide coverage through the commercial market, the Health Connector marketplace and Medicare and Medicaid, offering numerous plans under each umbrella. Each individual plan owned by an insurance company is usually a separate negotiation.

Health providers may not always contract with every plan offered by an insurer, and an insurer may also choose to exclude a provider from limited network plans, for example.

Negotiations are a ‘sausage factory’

Dr. Vikas Saini is the president of the Lown Institute, a Needham-based nonprofit health care think tank. A cardiologist for more than 15 years on Cape Cod, he sees negotiations between hospitals and insurers as a chain of “maneuvering and gamesmanship” where one ultimately gives into the other, or they declare an impasse.

“It is about money,” Saini said. “But it’s hard for me, from where I sit with my experience, to say one or the other is the bad guy.”

The public’s primary concern, he said, is that they’re covered when push comes to shove. The brokering of the deal isn’t on their radar.

Saini likened health insurance negotiations to “a sausage factory, and the public sees just what comes out the other end.” Most of the time, the details of contracts aren’t released, either.

An alternative to the current U.S. health care landscape will continue to be fervently debated, locally and on Capitol Hill. No matter the future, Saini said, a priority should be a sector that is “fully transparent,” one where the public is made to understand “when and how the prices that they’re being asked to pay are being generated.”

Alan Sager, a health care economist and professor of health law, policy and management at Boston University, said abstract nuances (in-network versus out-of-network) ultimately make it harder for people to receive the health care they need.

“It’s a nightmare,” Sager said. “If you were in the former KGB (Soviet Union intelligence and security agency) and you wanted to demoralize Americans, you’d probably design U.S. health insurance to confuse everybody and waste our time.”

He further compared the dynamic between insurers and hospitals to a game of ping pong, “using us as the little white balls.”

A 2024 cost trends report by the Massachusetts Health Policy Commission said economic pressures placed on health care providers “are confounded by persistent wide variation in commercial health insurance payments for the same types of services, without commensurate differences in value.”

When the parties can’t come to an agreement, patients lose.

“All of this makes for enormous and unnecessary complexity,” Sager said. “It’s unnecessarily disruptive. Most people who have pain or illness or injury really value continuity and predictability of care, forming relationships of trust with caregivers.”

In a previous interview with MassLive, State Rep. Jim O’Day, D-14th Worcester, advocated that patients should be provided a “longer runway” in terms of notification when a potential loss of coverage is looming due to contract negotiations. Currently, it’s 90 days. In today’s health care landscape, that’s not a lot of time to secure a new provider, O’Day argued.

Both hospitals and insurers face financial losses

Karen Granoff, senior director of managed care policy at the Massachusetts Health and Hospital Association, said the state’s hospitals are “working around the clock” to navigate a prolonged crisis that’s impacting every part of their operations.

“They are struggling to stay above water, and insurance reimbursement is an essential factor in their ability to remain open and accessible to everyone in need,” she said.

Considering how complex health care has become for patients and providers to navigate, Granoff called for a collaborative approach among all vested parties “to make our world-class system even more convenient and transparent for the millions of people who rely on it.”

Pellegrini, of the Massachusetts Association of Health Plans, acknowledged a “persistent” narrative among the public that insurers are the “bad guys,” one that was recently elevated by the killing of UnitedHealthcare CEO Brian Thompson.

But in the Bay State, she said, they’re “highly, highly regulated,” and the majority are not-for-profit.

The largest health insurance company in the nation, United Health Group, is for-profit, for example. In its third quarter last year, it reported profits that surpassed $6 billion.

Things look different in Massachusetts.

“State law says that health plans may have their insurance rates denied if they make more than 1.9% in surplus or profit,” Pellegrini said. “Further, if Massachusetts health plans fail to spend 88 cents of every dollar on direct medical care, they may be required to issue rebates to consumers.”

When hospitals publicize financial difficulties related to the increasing cost of care, she added, insurers are in the same boat.

In the case of Point32Health, the insurer reported an operating loss of $155 million for the first six months of 2024, citing “elevated health care costs driven by increased utilization for services in pharmacy, including GLP-1 weight loss drugs, acute and post-acute inpatient admittance and residential treatments for substance use disorder.”

Pellegrini said most health plans operating in Massachusetts have posted financial losses for the past several quarters.

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