Belleville Memorial Hospital Takes on Nation's Largest Insurer

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Belleville Memorial Hospital and UnitedHealthcare are moving toward a showdown next month over hospital and physician reimbursement rates.

If an agreement cannot be struck, Memorial and its physicians group will no longer be in the network of the nation's largest insurer.

Such contract disputes are becoming increasingly common as insurers and health providers vie for scarce health care dollars in a sluggish economy.

The contract talks between Memorial and UnitedHealthcare have simmered for the last couple of years, but they turned potentially volatile in recent days as the two sides began to squabble publicly.

"We're certainly struggling over the same dollar," said Joe Lanius, Memorial's chief financial officer. "United is a big plan and wields its size at times. It's a tough plan to negotiate with. It leads to frustration."

Memorial recently sent a form letter to its patients, informing them that its contract with UnitedHealthcare may soon end because the hospital is being paid below-market rates.

"This change could impact your ability to receive care at our hospital and with our physicians," the letter states.

The May 10 letter, signed by Memorial Chief Executive Mark Turner, encourages patients to talk to their employers and also phone or email Steve Walli, president of UnitedHealthcare-Missouri and the River Valley and state their preference for "a network that includes in-network access to Memorial and its providers."

UnitedHealthcare won't discuss the details of its ongoing negotiations with Memorial, but suggests that the hospital's demands are unaffordable.

The insurer "is committed to providing our customers access to quality health care through a broad network of physicians and hospitals at affordable rates," said UnitedHealthcare spokesman Kevin Shermach.

He said the insurer's current contract with Memorial Hospital continues through the end of June, and its contracts with Memorial Medical Group physicians begin to expire at the end of August.

According to a message on Memorial's website, the insurer on average pays the hospital and its physicians group "less than other insurance companies and, in some cases, less than the payments we receive from Medicare."

Memorial's Lanius declined to identify the medical procedures for which the insurer pays rates lower than Medicare.

"United's low payments to our hospital and our physicians is the key issue that must be resolved," Memorial said on its Web page. "This is simply not acceptable, nor is it fair."

According to Memorial, the problem has existed for several years and the hospital has sought unsuccessfully to renegotiate pay increases.

"Having a lower pay stream is hampering our ability to move forward," said Lanius, whose hospital owner the Belleville-based Protestant Memorial Medical Center Inc. plans to build a new 94- bed hospital in Shiloh.

On about March 1, Memorial gave notice to the insurer that unless a satisfactory agreement is reached, the hospital will be "out of network" after June 30.

In other words, patients insured by UnitedHealthcare who receive care at Memorial would have to pay higher, out-of-network charges. The hospital plans to make exceptions for certain pregnancies and chronic conditions.

Lanius said the sticking point is the rate of pay increase for Memorial hospital and Memorial Medical Group of about 63 physicians and two dozen nurses and nurse practitioners.

Such disputes have common themes.

In early 2012, after months of stop-and-go negotiations, Healthlink Inc. and Anthem Blue Cross and Blue Shield in Missouri struck a deal for a four-year managed care contract with St. Louis University and Des Peres hospitals, which are both owned by Dallas- based Tenet Healthcare Corp.

UnitedHealthcare and other major insurers say they are willing to pay fair and reasonable compensation to physicians and hospitals, but they say they can't afford to pay every dollar that doctors demand. …