A Contracting Crossroads

It’s getting harder for health plans and hospitals to see eye to eye.
Here’s what CDPHP® wants you to know.

As a CDPHP member, you deserve transparency, partnership, and a long-term strategy from your health plan. CDPHP wants to make sure you’re informed about some important items on the horizon, including the challenges facing regional, not-for-profit health plans like CDPHP.

Each year, CDPHP negotiates with hospitals on your behalf, but in reality, it’s your premium dollars. Demands for significantly higher prices for services push up premiums and how much you pay out of pocket for your care. That means more money from you, and that’s why we fight for lower prices. 

Here’s what else we’d like you to know about these negotiations:

• Costs have been increasing in all areas of our lives. Health care is no exception. Both hospitals and health insurers have faced serious financial headwinds coming out of the COVID-19 pandemic. In many cases, hospitals are turning to insurers to pay them more to make up for the financial difficulties.
• Many of the financial difficulties faced by hospitals and insurers are rooted in how the government pays for Medicare and Medicaid. Hospitals argue that Medicaid and Medicare underpay them, so they demand higher rates from private health plans. However, the compounding effects of this strategy are not sustainable for small, regional, not-for-profit health plans like CDPHP, where we budget for a very slim 0.5-1% margin annually.
• Not-for-profit health plans in upstate NY are also suffering due to ongoing federal changes with the Medicare Wage Index, which changed the way hospitals are reimbursed for care. This change resulted in a needed boost in federal funds for hospitals but caused serious financial troubles for upstate NY not-for-profit health plans. For CDPHP alone, this change contributed to a $168 million loss in 2024.
• For nearly a decade, CDPHP has received unprecedented double-digit rate increase requests from hospitals throughout upstate NY. Although we do our best to support the critical services our hospital partners provide, the compounding effect of these rate increases would mean exponentially higher costs for members and employers, who are already experiencing cost increases in every other facet of their lives and businesses.

The combined effects of the tension described above often lead to tough contract negotiations between insurers and hospitals. While both sides want to preserve patient access and quality care, aligning on rates and terms in today’s seismic economic climate is more difficult than ever.

We understand how frustrating it can be to feel stuck in the middle when all you’re trying to do is access the benefits you’ve paid for. You should know that our goal is always to strike a balance between keeping health care affordable for our members and negotiating fair, sustainable contracts with hospitals.

And we are committed to doing just that.