Author: John K. Hall, MD, JD, MBA, FCLM, FRCPC | July 28, 2026
This article arises, in part, from my Monitor Monday segment on the organizational responses to Aetna’s inpatient payment reduction policy. As a quick review, under the policy, inpatient claims for 1-3 midnight duration are approved as inpatient but subjected to a reduced payment.
As I mentioned this is genius since it avoids the operational consequences of denials while still saving Aetna money on payments. During the segment I outlined several viable responses to Aetna’s predatory practice.
Subsequently I received many questions and comments about the perception that organizations have had such a limited response. Some providers have responded. Others have not. Many providers simply wedged the new payment policy into denial structures. I suspect that a major reason that for limited response is something called “status quo bias.” This phenomenon was first recognized in 1988. We know it by its more colloquial name “inertia.”
In short, status quo bias is the psychological and emotional preference for the current state of affairs resulting in a resistance to change that can paralyze otherwise skilled decision makers. The two best examples are changing your auto insurance and changing your rental storage unit.
Status quo bias is not completely illogical. First the organization must reconcile the need for new training and tachniques associated with a modified strategy. Even if the modified has InoI additional costs it still must be assessed in light of the “sunk costs” associated with current strategies.
Any new costs invoke the possibility of additional losses. Under any extant strategy losses are generally calculable- possibly even manageable. New strategies entail additional costs in an unpredictable fashion. That brings an inherent risk aversion. Organizations, typically assign greater importance to losses than potential gains even in situations where losses and gains are identifiable with relative certainty.
Next is regret avoidance. In those cases where we know the current losses, and the reason for the losses, we generally prefer the status quo to the possibility of a change that may ultimately fail. This plays a prominent role when stakes are high, and the current risks are deemed “acceptable.”
Next is the possibility of two related effects called choice overload and decision avoidance. In the case of responses to Aetna’s payment policy the choices are somewhat limited- certainly not overwhelming. But some responses may have adverse financial implications thereby encouraging decision makers to avoid decisions.
Finally, an organization must be able to accept that a new strategy will yield superior outcomes.
So how can an organization make a change. First, it requires a willingness to make and understand data-driven analyses. Then, the organization must accept the analyses and conclusions. The next step is to develop a logical response including an extensive failure mode analysis. Finally, the change must be operationalized.
I make this sound easy but the two immediate roadblocks are the decision maker and the organizations members. The decision maker must manage cognitive dissonance.
Longer delays related to operational changes lead to greater cognitive dissonance and the likelihood of stagnation.
This article was originally published on RACmonitor.
