Three weeks after their old contract expired, Piedmont Healthcare and UnitedHealthcare remain far apart in trying to reach a new one.
Since July 1, five Piedmont hospitals–including its flagship Piedmont Atlanta in Buckhead–as well as health system doctors, have been “out of network” to tens of thousands of United members. Those patients now face higher out-of-pocket costs if they choose to go to Piedmont facilities and physicians.
The standoff features two health care heavyweights — the nation’s largest health insurer pitted against a leading metro Atlanta health system with more than 100 years of service in the area.
The large majority of such disputes between hospital systems and health insurers are settled prior to the cutoff deadline, but this one appeared especially intractable even as the deadline approached in late June.
The two sides have exchanged proposals since July 1, but according to a Piedmont official, there’s little progress toward an agreement.
“Right now, we don’t see any path to resolving this,’’ Matt Gove, Piedmont’s chief consumer officer, told GHN. “What they’re proposing isn’t in the best interest of our patients and our community.”
Daryl Richard, a United spokesman, said negotiations “are going slowly. We were expecting greater engagement from Piedmont to reach a quick resolution and restore in-network access for the people we collectively serve.”
The dispute is largely over reimbursement rates, which the two sides characterize very differently.
Minnesota-based UnitedHealthcare says Piedmont Healthcare wants to raise the cost of care at its hospitals by nearly 30 percent over the next three years. Local businesses can’t absorb such big cost increases, United said.
Piedmont’s chief operating officer, Greg Hurst, said last month that United’s assertion about rates was not accurate. He said Piedmont was asking for single-digit rate increases annually.
Pressure for a deal may increase
Besides its flagship Atlanta hospital, the nonprofit Piedmont system operates Piedmont Fayette Hospital, Piedmont Henry Hospital, Piedmont Mountainside Hospital (in Jasper) and Piedmont Newnan Hospital. (Piedmont also recently acquired a Covington hospital, now known as Piedmont Newton, but that facility is not part of the contract. Piedmont also has a deal pending with Athens Regional Health System to join its system.)
Dave Smith, a consultant with Kearny Street Consulting, said that the contract stalemate appears to be “a game of chicken, to see who’s going to blink first.’’
Smith noted that open enrollment season is approaching for many employer health plans.
“The process of making decisions [on health plans] is on the front burner for employers,” Smith said. If the dispute gets resolved, he predicted, it will be done before open enrollment begins.
Smith said employers in such disputes are concerned both about rising health care costs, and about preserving access to brand-name medical providers such as Piedmont’s.
United has stepped up its cost argument, saying that if Piedmont’s rate increase is granted, an emergency room visit would cost $340 more than the current fee. A newborn delivery would be $1,950 more, the insurer says.
“A 30 percent increase means more money would be coming out of an employer’s bottom line to pay for their employees’ health care, rather than funding salaries, investing in new technologies, or helping grow the business,” the insurer says.
Some patients who are now out of network are putting up with the higher costs so they can continue to see Piedmont physicians, the health care system says.
“Choice is very, very important to our patients,’’ Gove said.
Many United clients, meanwhile, have qualified for “continuity of care” benefits, which can temporarily extend their in-network access to Piedmont. These patients include those who are currently pregnant or receiving ongoing treatment.
Healthcare CostGove, criticizing United, pointed to the insurer’s recent earnings statement as a demonstration of “what’s important to them.”
This week, United reported that the company’s profit increased 11 percent in the second quarter to $1.75 billion, and revenue reached $46.5 billion. But it also recorded additional losses of $200 million from its Affordable Care Act exchange business. Those losses have led United to drop its offerings in exchanges in Georgia and elsewhere.
Some companies heavily affected
Health care experts note that Piedmont’s southern suburban tier of hospitals – in Stockbridge, Newnan and Fayetteville – is very important to people living in that area. That’s reflected in the interest in the contract from Delta Air Lines.
The huge air carrier is headquartered in Atlanta, where more than 30,000 of its employees are believed to be based. Many of them live near the city’s international airport, in the southeastern suburbs where Piedmont is the dominant health care system. And United is Delta’s only health insurance provider.
Delta said in a statement that it is continuing to monitor negotiations between United and Piedmont.
“We have expressed to each of them the importance of reaching a fair and timely agreement,’’ said the statement. “Our employees and their families must continue to receive quality health care at an affordable cost. Until an agreement is reached, Delta is working to make this transition easier for our people through frequent communication and multiple resources.”
The Coca-Cola Company, based in Atlanta, also has United for an insurance vendor. The company is making special arrangements for employees in the Atlanta area who are UnitedHealthcare members, allowing them to go to Piedmont at the same payment rates as before, when Piedmont was in network for United.
Among other contract disagreements, United says, is its request for a “performance-based’’ relationship with Piedmont, focusing on patient outcomes and quality of care rather than simply the volume of services delivered.
The insurer has also said Piedmont is the only hospital system in its Georgia network that does not provide information for United’s cost estimator tool, which members use to get cost information.
Referring to this tool, Piedmont’s Hurst said recently that “generally we don’t join things where we have zero control over how it’s calculated or how it’s used.”
Rachael Collier, a partner of Synergy Benefits, an Atlanta firm, said the contract dispute between Piedmont and United has caused concern among employers and their workers.
“Health care is a very personal issue,” said Collier, who works with employers. “The side I’m on is to try to keep health care costs down for my clients.”
She said one Atlanta-area employer with 350 workers had signed up with United on June 1, just a month before the insurer’s contract with Piedmont expired. Many of those employees use Piedmont, Collier added.
“They’re very upset’’ about their preferred health system being out of network, she said. “They’re not happy about it.’’