Aetna Executive: Network Quality Fine, Despite Dropped Providers

Aetna Inc. (AET) maintains solid networks of health-care providers even though it has dropped those hospitals unwilling to accept the insurer's reimbursement rates, a company executive said Friday.

"Although we have terminated a number of relationships over the past 12 months, we continue to have more than adequate network and quality network providers," Jeff D. Emerson, who oversees Aetna's provider contracting, said at the health insurer's investor conference.

Provider systems requested rate increases of up to 65% for 2010-2011, as costs shifted to commercial insurers amid Medicare and Medicaid reimbursement cuts, according to Emerson. Lower patient utilization of medical services--a recent trend during the recession--has resulted in higher hospital fee requests, according to Aetna.

The health insurer responded by negotiating what it considers acceptable rate increases and terminating providers that wouldn't agree to its numbers.

"We are negotiating better prices and changing reimbursement methodologies to focus on quality," Emerson said. Besides being more assertive on price, Aetna is more aggressively pursuing collaborations with providers, namely accountable care organizations, or ACOs, in which participating hospitals and doctors agree to be responsible for the quality, cost and care of patient populations and to be paid according to their success in doing so.

Aetna is engaged in more than 100 conversations about building ACOs, Emerson said.

Insurers, physicians and hospitals are in the early stages of developing ACOs, and government policy makers are writing rules for a related Medicare program that are expected to influence private-sector insurers' arrangements with ACOs treating their commercial customers.

-By Dinah Wisenberg Brin, Dow Jones Newswires, 215-982-5582; dinah.brin@dowjones.com

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