New tiered network trips up IU Health, UnitedHealthcare talks

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In spite of offers to strike a short-term extension, UnitedHealthcare and Indiana University Health are still hung up in contract negotiations on one key point.

According to IU Health, Minnesota-based UnitedHealthcare wants to create a multi-tiered network of providers and services that would offer the lowest co-pays and deductibles for favored hospital systems—which IU Health is not.

IU Health would be in the upper tiers, where co-pays, co-insurance and deductibles would be somewhat higher.

It’s a variant of the narrow network concept that Anthem Blue Cross and Blue Shield embraced last year for the policies it sells in the Indiana individual market. Anthem included Communtiy Health Network, Eskenazi Health and the Suburban Health Organization in that network, but excluded the state’s three largest hospital systems: IU Health, St. Vincent Health and Franciscan Alliance.

IU Health officials say they’re OK with United’s tiered concept, even though they recognize it will inevitably steer fewer UnitedHealthcare customers into IU Health’s offices, outpatient centers and hospitals.

But if UnitedHealthcare is going to bring a lower volume of patients to IU Health, then IU Health wants a higher price. That’s par for the course in health insurance negotiations, where the insurers with the largest market shares pay the lowest prices, and the smallest insurers pay the highest prices.

“If they want to direct care to our facilities only in times of severity, that expertise naturally comes at a higher price than if patients were free to really utilize IU Health as truly in-network,” wrote Whitney Ertel, an IU Health spokeswoman, in an email.

A spokeswoman for UnitedHealthcare, Jessica Kostner, said in a statement that the company continues to work toward a "mutually beneficial solution for our members and patients."

IU Health has also offered to extend its old contract with UnitedHealthcare for 90 days, or 180 days, or even a full year. But UnitedHealthcare declined, citing "unfavorable terms."

"UnitedHealthcare's obligation is to ensure that the consumers and employers we serve have access to affordable health coverage, and we will not accept an offer that places an unfair financial burden on our customers and members," the statement said.

IU Health and UnitedHealthcare’s contract dispute dates back to 2012. When the parties couldn’t come to terms then, they agreed to extend the old contract for an additional year. That extension ran out on Dec. 31, causing IU Health to become “out-of-network” for UnitedHealthcare policyholders.

Normally, that would mean UnitedHealthcare’s customers would pay higher prices at IU Health’s hospitals and physician offices. But IU Health decided to give patients the same "in network" co-pays and deductibles that UnitedHealthcare had negotiated under the expiring contracts, keeping patients’ costs the same until a new deal is reached.

However, IU Health is still charging UnitedHealthcare its full, undiscounted prices until a new contract is reached. Those discounts are typically more than 30 percent.

IU Health officials have suggested that, whenever they strike a new deal with UnitedHealthcare, that it be effective retroactively to Jan. 1, so patients do not pay more than they would have otherwise.

Some employers have been frustrated by the impasse, sending letters to both UnitedHealthcare and IU Health. Some have accused UnitedHealthcare of misrepresenting its policies by not disclosing to them before their annual renewal last year that it was already operating on an expired contract with IU Health and that it was possible IU Health might fall out of network.

UnitedHealthcare, in its statement, said IU Health was the first party to send notice of terminiation, in mid-2013.

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