St Joseph’s Hospital in Atlanta, Georgia and United Healthcare are nearing the deadline for negotiating a new contract. This article will offer an explanation of some of the dynamics behind negotiations between Georgia health insurance companies and medical providers.
In addition to the currently ongoing negotiations between Aetna and Wellstar, there is a problem brewing between St. Joe and UHC. According to the Friday, July 31, 2009 edition of the Atlanta Journal Constitution, a hospital spokesman is quoted as saying UHC had “all but walked away from the table”.
Roger Rollman, UHC spokesman, denied the company had pulled back from talks. “We haven’t closed any doors,” he said. “We’ve provided St. Joseph’s with multiple scenarios of increasing reimbursement and in each instance they’d come back and respond to us that this is what it’s got to be. It’s a take it or leave it and that’s not negotiations.” He declined to specify the percentage increase being sought but said it was in the “double digits.”
Sources tell me St. Joe wanted 24%.
That’s a hefty increase in anyone’s book.
So what happens if United HealthCare in Georgia (or any other carrier) caves and agrees to the increase? And what happens to UHC policyholders covered by PPO and HMO plans if negotiations collapse.
If UHC agree’s to their demands that means patients who are treated at St. Joe, both currently and in the future, will have to be charged a higher premium to cover the higher costs. Of course UHC has no way of knowing who will need treatment specifically at St. Joe in the future so the cost estimate will be added to total claims and spread out over all UHC insureds in Georgia.
That in itself is not so bad. But what about the domino effect?
If St. Joe get’s a big raise, what is to stop Wellstar, Tenet, Piedmont, Northside, Emory and others doing likewise? And why stop in Atlanta? How about the rest of the state?
No one seems to question if hospitals and doctors need more revenue. The only question is, how much is reasonable and then passing it on in the form of higher premiums.
Health insurance premiums rise in direct proportion to the underlying cost of health care. If the cost of health care jumps 24% in one year the premiums must follow.
No one wants that.
What happens to UHC policyholders if negotiations fail?
Not as much as you might imagine, but there will be an impact. Keep in mind that, many times the negotiations go to the 11th hour. Occasionally the contract will be allowed to expire and a new one will be inked within a week or so. Rarely do both parties pick up their bat and ball and go home.
St. Joe is a center of excellence, is ranked in the top 50 of hospitals in the United States, and is the only hospital in Georgia to receive that designation. Many employee’s and their dependents who are covered through the Georgia Merit System have their claims adjudicated by UHC, so there is a strong tie between St. Joe and UHC. Some 8500 patients, perhaps many of them Merit System covered participants, are treated by St. Joe and their affiliated clinics.
If this union dissolves, even for just a few days, this does not mean insureds of UHC can no longer receive treatment at St. Joe or their clinics. What is does mean is that St. Joe would be considered a non-par (out of network) facility. As such, claims submitted by St. Joe would be adjudicated and paid at the “going rate” for par providers and the patient would be responsible for the balance.
When a claim is submitted by a par provider, the claim is adjudicated and repriced (discounted) to reflect the agreed upon amount for the procedure. An EOB (explanation of benefits) is generated and provided to the insured and the provider. The EOB lists the procedure, the billed amount, the adjusted amount (reflecting the “discount”), the amount paid by the patient (if any) and the amount paid by the carrier.
Any (adjudicated and approved) remaining balance can legally be collected by the medical provider. Anything excess of that cannot UNLESS the bill is for a procedure that is not allowed under the health insurance policy. An example would be where a doctor order’s an MRI as part of a breast examination and the MRI is beyond the scope of what is considered medically necessary under the terms of the health insurance policy.
As a non-par provider, St. Joe would be able to charge patients whatever they wish, over and above the amount offered to other providers for the same procedure, and the patient is obligated to pay that difference. They are no longer protected by a legal contract that limits the amount a provider can charge, and collect, for services rendered.
Other than the possible loss of patients covered by UHC, there really is little incentive to bargain in good faith towards a resolution. If they fail to come to terms with UHC the patient loses and St. Joe can charge (and attempt to collect) whatever the market will bear.
Failing to reach an agreement will really benefit no one. Each party comes away with a black eye (although in most cases like this the public brands the insurance carrier as the bad guy). UHC “loses” a prominent Atlanta hospital. St. Joe “loses” access to at least some future business from UHC insureds.
Of course the patient is caught in the middle of all this and loses more than anyone.
My hope and belief is that there will be a happy ending although the road may be bumpy along the way.