UnitedHealthcare, one of the largest group health insurers in the area, has reached an impasse in new contract negotiations with Dayton-based hospital network, Premier Health — potentially jeopardizing the health plans of up to 70,000 local residents, the Minnesota-based health insurance giant said Thursday.
The health insurer’s current contract to cover care provided at Premier hospitals, physicians’ offices and urgent care facilities is set to expire in the next 30 to 45 days for all lines of business, including employer-sponsored health plans, Medicare Advantage and Medicaid coverage, the company said.
UnitedHealthcare’s contract with Premier hospitals is set to expire April 29 for employer-sponsored and Medicare members, and on May 13 for Medicaid members. Meanwhile, the company’s contract with Premier physician groups will expire May 13 for employer-sponsored, Medicare and Medicaid members, if new terms cannot be reached, the company said.
While negotiations will continue, UHC said it is preparing to notify members — including thousands of employees at several large employers in the Dayton area — that it might not be able to reach a new deal.
“We’re not trying to create a fight in the market, but…employers need to weigh in on this as well,” said Caitlin Clipp, UHC’s executive director in southwest Ohio.
Premier officials said in a statement that they are confident they can get past any sticking point in the negotiations: “The notices that UnitedHealthcare is sending to its members are a legal requirement. We anticipate resolving the negotiations with UnitedHealthcare by the contract deadline of April 29.”
At issue, according to UHC, is the insurer’s plan design, which promotes price transparency by ranking hospitals and providers in tiers based on the cost and quality of the care they provide, Clipp said.
“Premier Health Network wants its hospitals to be considered Tier 1, but won’t commit to meeting the cost efficiency requirements to be Tier 1,” she said. “Listing Premier Health’s facilities as Tier 1 when they do not meet the cost efficiency requirements would be inappropriate and unfair for our employers and members.”
Clipp said, for example, that the cost for s UHC member having Lumbar Fusion (back surgery) at Premier’s Good Samaritan Hospital in Dayton is $148,904, while the same procedure costs between $36,000 to $63,000 at other in-network, Tier 1 facilities throughout Dayton and the region.
Premier said the example is misleading because prices can vary dramatically for certain procedures, even within the same market.
“Premier Health is reimbursed for approximately 500 kinds of diagnosis-related groups,” the hospital network stated. “For some kinds of procedures, we receive more reimbursement than other health systems and hospitals do; for other procedures, we are reimbursed considerably less. For UnitedHealthcare to call attention to this one particular example is a gross distortion of the facts.”
Still, employers — especially the 70 percent of Dayton-area employers who are self-funded and pay health benefits out of their own coffers — are eager to see the cost differences, said Scott McGohan, CEO at McGohan Brabender insurance brokers in Moraine.
“Obviously, the employer is very interested in the cost of health care in the market,” he said. “If I’m an employee, and my out-of-pocket cost is capped at $5,000, I don’t really care where I go for care. But the employer could be paying a lot more, depending on the price difference. I’m not sure many hospitals want to play in this tiered network space, understanding that their cost structure could be higher than other hospitals.”