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No deal in sight between Premier and UnitedHealthcare contract talks

Published: Friday, October 06, 2017 @ 5:00 PM
By: Kaitlin Schroeder - Staff Writer

Unless a deal is reached soon between UnitedHealthcare and Premier Health, thousands of people with Medicare plans through the insurer will soon have to decide whether they want to switch insurance companies or health care providers next year.

The contract between UnitedHealthcare and Premier, the region’s largest health system, expired May 13 after negotiations fell apart, but Medicare Advantage recipients were exempted and have remained in network under a deal that extends until the end of this year.

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That leaves many Medicare recipients with a dilemma. Medicare open enrollment period starts Oct. 15. and runs until Dec. 7. With the two parties saying their negotiations remain far apart, the 4,000 Medicare Advantage members with UnitedHealthcare that use Premier Health are faced with choosing a new doctor or a new insurance company.

“We’re not even talking at this point,” said Tom Duncan, Premier Health chief financial officer.

The dispute centers around the giant insurer’s plan to rank hospitals and doctors in tiers based on cost and quality, with the goal of incentivizing lower health care costs.

Premier opposes the ranking system, which it says is already steering patients away from its hospitals and providers.

“Our bottom line is off millions per month by this,” Duncan said.

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Although early data indicates that about 45 percent of the ER volume it normally gets from UnitedHealthcare-covered patients is staying with them, the remaining 55 percent appears to be going to other providers, he said.

Patients with health benefit plans that are part of the UnitedHealthcare tiering system have lower co-payments if they choose doctors from a group ranked “tier 1,” which includes physicians the insurer considers cost-efficient.

Premier officials say the ranking system doesn’t take into account expenses the hospital system has for offering specialized care such as its Level 1 trauma center, high risk maternity care, and burn care. The cost data used by UnitedHealthcare to determine its tiers is skewed by these higher-end services, according to Premier.

None of Premier’s hospitals are in UnitedHealthcare’s tier 1, although some of its doctors are.

UnitedHealthcare said in a statement that it is pushing the tiered system because it wants to lower health care costs and provide choice to its members.

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“Employers balance health care costs and health care benefits by designing health insurance plans with incentives that encourage their employees to choose high quality and low cost health care providers,” UnitedHealthcare stated. “Designing benefits with such incentives is the perfect way to preserve choice. All of the same local providers, including Premier (if it still participated in our network), would still be covered as in network, but employees enjoy lower copays or coinsurance when they choose quality, lower cost care providers.”

Premier has a large network of primary care doctors under its umbrella, along with Miami Valley Hospital with an additional site at Miami Valley Hospital South, Good Samaritan Hospital, Atrium Medical Center and Upper Valley Medical Center.

Hospitals that remain in UHC’s network include Dayton Children’s, Grandview, Greene Memorial, Kettering Medical Center, Medical Center at Elizabeth Place, Soin Medical Center, Southview, Springfield Regional, and Sycamore.

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Big money

Contract negotiations between insurers and providers determine reimbursement rates paid by the insurance company.

The contract offers between the two companies are far apart on whether UnitedHealthcare will pay more, or less, to Premier for services provided to their customers.

Premier said the last offer it put on a table was for no rate increase in 2017, a 3 percent increase in 2018, a 3 percent increase in 2019 and no increase in 2020. UnitedHealthcare’s last offer is a 10 percent rate decrease in 2017, a 5 percent decrease in 2018, and a 5 percent decrease in 2019.

UnitedHealthcare said none of Premier’s offers address the high cost of care that gets passed onto its customers.

“All of Premier’s proposals maintain its position as one of the most expensive health systems in Ohio while also demanding local businesses be restricted from offering competitive benefits that put consumer choice first and allow workers to be rewarded for choosing quality, cost efficient care providers,” it stated.

Premier officials dispute the data used by UnitedHealthcare, calling it “incomplete and misleading.” They also say it doesn’t account for the unique services that Premier provides and the high number of Medicaid patients that it treats at a financial loss to the health provider.

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Medicaid does not pay the full cost of care, it says, so the system must either absorb a $50 million loss on its books or cost-shift from elsewhere to cover the difference.

“It’s our high-priced, high-cost, very specialized services that are driving our prices up,” said Duncan.

UnitedHealthcare said seniors who stay with the insurer can still get care at other places if Premier remains out of network, like Kettering Health Network, Providence Health Network, Mercy Health and PriMed Physicians.

“We are fortunate to have relationships with many other hospitals and physicians in the area to ensure the Medicare Advantage members we serve have uninterrupted access to the care they need, should Premier leave our Medicare network,” it said.

Sticker shock

As talks broke down this summer, some patients encountered sticker shock.

As long as Premier remains out of UHC’s network, UnitedHealthcare patients who go to Premier providers aren’t protected by maximum out-of-pocket caps and annual deductible caps.

Premier says this has led to some unexpected high bills for patients sent to Miami Valley Hospital, which has the only Level 1 emergency room in the area.

In one example that Duncan described as a typical visit, a UnitedHealthcare patient arrived at the emergency room and received a $4,000 bill. Withholding the name of the patient, he said UnitedHealthcare designated the full bill to the patient.

From May, when the contract is expired, to August, Premier saw roughly 1,100 similar UnitedHealthcare emergency room cases, Duncan said.

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Premier CEO Mary Boosalis said “from a pure humanitarian point of view” she’d like to forgive the patients’ bills because they are stuck in the middle of something they can’t control. But, she said, that would be a slippery slope that would not only be prohibitively expensive, but also eventually lead to insurers like UnitedHealthcare and Anthem not being motivated to negotiate with Premier.

“You might think ‘Geez, where’s your compassion?’ But it’s the implications of how you treat people and why you do actually need a contract,” she said. 

‘Running out of flex’

The dispute between Premier and UnitedHealthcare reflects how tensions have been heating up between hospitals and insurance companies as the financial strain the health care system is under starts to boil over.

On an average day in the Dayton region, 79 percent of patients are paying with Medicaid or Medicare. Those government insurance programs don’t fully reimburse hospitals — Premier gets about 60 percent reimbursed from Medicaid — and to cover those funds, the hospitals shift those costs over to commercial insurance companies like UnitedHealthcare, which have begun to push back.

The Dayton region is older and less affluent than most Ohio cities, hurting from losses of big companies like NCR and General Motors, which removed thousands of jobs with health-care coverage from the market.

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That has contributed to a higher rate of patients in the Dayton area on some form of government insurance compared to other Ohio metro areas, according to the Greater Dayton Area Hospital Association.

Boosalis said the health system for years has shifted costs and worked to provide quality health care at the lowest possible cost, but it is getting difficult to navigate.

“It’s like nothing I’ve ever seen and we’re starting to have these very difficult conversations because we’re running out of flex with these economic dynamics,” she said.