Insurers and Insurance and Health Care & Life Sciences and Health Care & Insurance

IU Health could fall out of network for UnitedHealthcare

December 6, 2013

Indiana University Health hospitals and doctors could fall out of UnitedHealthcare’s discounted network on Jan. 1 if the two entities don’t come to an agreement by then.

IU Health, the state’s largest hospital system, and UnitedHealthcare, the state’s second-largest health insurer, have been unable to come to terms on a new set of reimbursement contracts, according to both organizations. The previous contracts end Dec. 31.

Such contracts between health systems and health insurers typically shave 30 percent or more off the list prices charged by hospitals and doctors.

Minnesota-based UnitedHealthcare sent letters to its customers, dated Dec. 2, which said contract negotiations with IU Health are unresolved and could result in IU Health providers leaving the UnitedHealthcare network. In notices sent to local benefits brokers late last month, UnitedHealthcare said the two organizations are wrangling over a reimbursement hike by IU Health and over how the new contracts will make more of that reimbursement hinge on measurements of clinical quality.

An IU Health spokeswoman confirmed the unresolved negotiations and expressed hope that a deal will be reached before year’s end.

“We remain optimistic that we will reach a resolution that is beneficial to both parties and the patients we serve,” wrote Whitney Ertel in an e-mailed statement. Referring to IU Health’s Riley Hospital for Children, she added, “If this were not to be resolved, consider the number of families that depend on Riley that would no longer be in network? I can’t imagine that would be a good thing for Hoosier families.”

A UnitedHealthcare spokeswoman declined to comment.

The contract dispute could affect the roughly 400,000 Hoosiers that have employer-based or individually purchased insurance with UnitedHealthcare. That represents about 12 percent of the Indiana commercial market, according to data from Tennessee-based market research firm HealthLeaders-InterStudy.

It’s unclear how many UnitedHealthcare customers are IU Health patients. The biggest impact would likely occur in Lafayette, where UnitedHealthcare claims market share about 27 percent and where the IU Health Arnett hospital has a major presence.

In the Indianapolis area, where there are roughly 1 million commercially insured customers, UnitedHealthcare’s market share is about 12 percent, or roughly 120,000 members, according to the HealthLeaders-InterStudy data.

Indianapolis-based Anthem Blue Cross and Blue Shield, which insures more than half of the Indiana commercial market, accounts for 20 percent of IU Health’s annual revenue. All other commercial insurers, including UnitedHealthcare, account for 13.5 percent.

IU Health operates 20 hospitals and employs nearly 1,500 physicians around Indiana.

Most similar contract disputes get resolved before a deadline is reached. One particularly contentious battle between Anthem and the Franciscan Alliance hospital system broke out in 2008 and ended up in court. But the parties eventually settled without patients being charged non-discounted prices.

Also in 2008, UnitedHealthcare had a contract dispute with Indianapolis-based Community Health Network hospital system, but it was resolved before it affected patients’ bills.

In 2005, Anthem and the OrthoIndy physician practice had a bitter battle that left OrthoIndy out of its network for two months.

Even with that history, local benefits brokers said they are monitoring the IU Health-UnitedHealthcare situation for their employer clients.

UnitedHealthcare nationwide has pushed nearly 20 percent of its doctors out of the networks it uses for Medicare Advantage patients, and such cuts have been felt in Indiana.

However, UnitedHealthcare spokeswoman Jessica Pappas said the cuts to the Medicare Advantage network have no impact on UnitedHealthcare’s commercial insurance products.

“We’re looking at how focusing our network, having closer having deeper collaborations with the providers in our network, can lead to better patient outcomes,” Pappas said.

UnitedHealthcare has also pulled back temporarily from the individual commercial insurance market in Indiana. The company has offered to renew all those customers on their existing policies before the end of the year, so their coverage will continue into late 2014.

By that time, at least, UnitedHealthcare hopes to have received approval to sell new policies in Indiana that comply with the strict new rules imposed on individual insurance by Obamacare, formally known as the Patient Protection and Affordable Care Act

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