Administrators explain Wellmont, UnitedHealthcare contract dispute

Nathan Baker • May 8, 2014 at 9:13 AM

Approximately 20,000 commercial and Medicare insurance policy holders with UnitedHealthcare in the Tri-Cities could lose their coverage at Wellmont Health System hospitals and associated physicians if the two companies cannot reach an agreement for services by the end of the month.

An email sent Tuesday from United Associate Director of Communications Sarah Bearce said the insurance provider is working to reach an agreement with Wellmont, but the health system is not cooperating.

“Wellmont appears to believe they should pocket higher pay without showing that they’re delivering better results for their patients,” the email said. “This is simply unfair for Tri-Cities residents. Wellmont is resisting the movement to pay-for-performance that’s underway in the broader health care system because the status quo is profitable for them. We appreciate how this can be disruptive for people, so we are committed to doing everything we can to reach an agreement that enables us to offer affordable, quality health care products to our members.”

When reached Wednesday for more of an explanation, United Regional Vice President Charles Russo said the rejected offer from the coverage provider followed a value-based incentive model, whereby the insurance company would pay a certain rate for coverage and then provide additional payments to the hospital or physician if specified quality or performance measures are met.

“It’s a trend in health care to set these terms of incentive modeling, it’s quickly becoming the industry norm,” Russo said. “Wellmont is our only major contracted physician group not involved in that type of modeling.”

But Wellmont officials said the offered rates were far lower than the previous contract with United and were unsustainable.

“Wellmont Health System is the latest in an increasingly long line of health care providers that have received unreasonable contract demands from UnitedHealthcare,” spokesman Jim Wozniak said Tuesday in response to United’s original email. “The terms UnitedHealthcare has proposed are unacceptable and grossly undercompensate Wellmont for the services it expertly delivers in our region.”

Alice Pope, the hospital system’s executive vice president and chief financial officer, said Wellmont’s physicians and services already charge some of the lowest rates for service in the local market, and the health insurance giant has been using its considerable weight to pressure other providers to accept unreasonable reimbursements.

“For instance, some of the reductions would dramatically impact our oncology service line, which includes very expensive drugs,” Pope said. “The most critical things to us are our patients, but we have to make a small margin and be able to recover what we pay for the drug.

“Some of the proposals by UnitedHealthcare dramatically impact that service line, and are looking to contract a rate reduction overall from already low-cost rates.”

If the two parties don’t reach an agreement by May 31, patients holding UnitedHealthcare insurance will no longer be in-network at Wellmont facilities, meaning procedures could cost more out of pocket.

Russo said insurance customers currently receiving treatment from the system could likely work out an arrangement with United to continue their care at in-network rates for a short period of time.

For others, he suggested local patients find another system from which to receive care, noting that Mountain States Health Alliance is in United’s network.

To retain Wellmont’s services, Pope recommended patients and employers change to a new, in-network provider for the system.

“United uses their power to influence the market, and we’re not going to accept it anymore, because we can’t accept it anymore,” she said.

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