ie a pharmacy will take insurance A but not insurance B, forcing someone with insurance B to look at other pharmacies or pay a greater amount of money out of pocket.
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So you’ve already got responses that explain that there’s a CONTRACT between each facility and each insurer. One hospital, takes five plans, that’s five different contracts. All are independent of each other. Right?
Now imagine:
There’s a hospital in Miami. It’s a big hospital. They take insurance from 15 different companies.
And there’s a small insurance company located in little old Fresno, California. It’s not a national company, it’s really meant to insure residents of Fresno. Maybe they’ll grow nationwide, but for right now, they’re local to Fresno.
Why would the Miami hospital bother getting into a contract with the Fresno insurer? The likelihood of someone from Fresno walking into the Miami hospital is low.
**Distance** is just ONE reason why a hospital or insurer may not want to enter into a contract. Maybe the hospital doesn’t like the insurer’s terms, maybe the insurer thinks the hospital is poorly managed. Or maybe they’re just too far apart.
Maybe the hospital made a contract with XYZ-Insurance, and that contract says that the hospital will not do business with ABC-Insurance, because they’re a competitor.
I’m sure if you rack your brain thinking of other scenarios, you can find many reasons why two entities may wish to not do business with each other.
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