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Premier-UHC dispute shows tense health care climate

The Premier Health and UnitedHealthcare contract deal last week that ended a seven-month stalemate is part of the tug-of-war taking place between hospitals and insurance companies throughout the country.

Tensions are high in the health care industry and each side is trying to better position itself in the increasingly complex and volatile health care environment.

Insurers like UHC want to carve out a cost model that protects against rising health care costs and pays for better value, while the hospitals say they want to preserve access and quality care while also protecting their bottom line amid shrinking reimbursements.

RELATED: Premier Health, UnitedHealthcare have contract deal

“In most cases, the parties find a middle ground and settle at the 11th hour, before they even need to sign short-term extensions,” said Allan Baumgarten, a Minneapolis-based health care analyst and consultant.

However, the Premier-UHC contract fight dragged on for an unusually long time compared to most contract negotiations, reflecting the growing pressure in the Dayton health care market as both sides hung to their core principals for more than six months even as the dispute hurt both parties financially.

Premier, which has four hospitals and a large network of doctors in the Dayton area, lost patients and UHC, the largest insurer in the country, lost customers to competitors and both faced public backlash from patients who were angry they had to pick to either see a new doctor, pay more for care or, if they could, switch insurers.

Premier CEO Mary Boosalis said the health network’s leadership is well aware of how difficult being out-of-network was for the community. Negotiations took a long time because the issues were complicated and it was important to get the right deal for patients, she said.

““The good news is that we got there,” she said. “It took longer than I would have liked, but we never gave up.”

Finally a deal

The contract was described as a multi-year deal, though details of the contract — or what led to the resolution — have not been disclosed.

Last year, both sides said the dispute centered around the giant insurer’s plan to rank hospitals and doctors in tiers based on cost and quality. If patients shopped for cheaper care, they’d pay a smaller co-pay.

Premier hospitals did not get “tier 1” ranking, though some of its doctors did. The network vigorously opposed the ranking system, which Premier said didn’t accurately reflect cost differences.

RELATED: Sale of Premier Health’s insurance line falls apart

Boosalis would not say whether tiering was a part of the new deal, saying the details are still being finalized. In the end the board got a deal that maintained the network’s principles, she said.

“I’m not saying it was easy,” she said of the issues at the bargaining table, “but they were resolved.”

Kurt Lewis, CEO of UnitedHealthcare of Ohio, said in the contract announcement: “Our priority is ensuring the people we serve have access to quality, cost effective health care.”

The region has 200,000 UHC policy holders and 70,000 of those residents were treated by Premier providers in the year leading up to the contract dispute.

Tense negotiations

The sticking points aren’t always the same, but tense negotiations have occurred between UHC — the nation’s largest health insurer — and hospitals across the country.

In St. Petersburg, Fla., UHC and Johns Hopkins All Children’s United were out of network for more than a month before the dispute was resolved. In Hartford, Conn., UHC and two hospitals extended their contract just two hours before the old contract would have expired. And in Tucson, Ariz., Northwest Heatlthcare and UHC worked out a new contract after being out-of-network for a week.

The disputes aren’t limited to UHC. In Minnesota, Blue Cross Blue Shield was unable to reach agreement on the rates charged for Medicaid patients at Children’s Hospitals in Minneapolis and St. Paul. Children’s was out of network for about 30 hours before the contract was settled.

Local impact

Patients who have built up relationships with their providers are often caught in the middle when contract talks break down.

Sharon Hairston, who has insurance through UnitedHealthcare after retiring the Mound in Miamisburg, had planned to stick with her long-time doctors at Premier even if the dispute dragged on.

But billing would have been a mess, she said, and she knows it would have been hard on the rest of the Mound retirees.

Hairston said she’s been with the same doctor for 25 years. “Why would I want to change doctors when I know this doctor and I’m comfortable with her?” she said.

Some patients, particularly in rural areas, don’t have the option of doctor shopping.

The only hospital in Miami County is Premier’s Upper Valley Medical Center, so when the dispute with UHC dragged on, patients had to drive long distances or pay out-of-network costs.


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Miami County Commissioner John Evans said the county government switched insurers from UHC to Medical Mutual out of concern the dispute would continue well into 2018.

Noting that Upper Valley is one of the region’s largest employers and an economic force within the county, he said, “Obviously it’s a great thing that they finally got this worked out and got back together.” But he said he wishes the deal was reached before insurance enrollment decisions had to be made.

Boosalis said Premier’s board of trustees knows how difficult the out-of-network months were for residents and received “a lot of very candid feedback” from the community.

“It was hard for any given person on any given day and I don’t think I’ll ever forget that,” she said. “But we had to look at the longer term and the greater good and that’s where we landed in the end.”

Cost shifting

Boosalis said the Dayton region presents challenges that aren’t in some other markets.

About 79 percent of Dayton-area patients on an average day use Medicare or Medicaid, which is a higher percentage than the U.S. average and the neighboring metropolitan areas, including Cincinnati and Columbus.

Premier also has a 21 percent higher inpatient load of Medicaid patients compared to Kettering Health Network, Premier’s main competitor.

Government programs don’t fully reimburse the hospitals, which means some of those costs get shifted to private insurers. As those insurers push for lower rates, hospitals say they have little room to move.

“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,” Boosalis has said.

In the interview last week, Boosalis said the financial pressures will continue.

“This doesn’t take away all the issues in this community,” she said.

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