Memorial Hospital, United Healthcare in contract dispute

News-DemocratMay 26, 2013 

One of the nation's largest health care insurance providers is still working out a contract that is set to expire with a Belleville hospital.

A contract dispute over hospital and physician reimbursement rates between Memorial Hospital in Belleville and United Healthcare is running up against a deadline. United Healthcare's current contract with Memorial Hospital continues through the end of June but has yet to be renewed.

The insurer's contracts with physicians employed by Memorial Medical Group will expire at the end of August if the contract with the hospital is not renewed.

Though both sides have been in talks for the past three years, the hospital says that renewing its contract with United Healthcare is no closer to an agreement. Memorial Hospital Chief Financial Officer Joe Lanius said the hospital wants to retain United Healthcare, but believes the hospital could lose the insurer as United Healthcare continues to pay below-market rates.

"We've been in negotiations with them, but we have not reached anything that is acceptable," Lanius said.

In a released statement, United Healthcare spokesman Kevin Shermach said Memorial Hospital agreed to resume negotiations on May 9 and the insurer hopes "to reach a mutual agreement that will allow for our long-standing relationship with Memorial Hospital and Medical Group to continue beyond June 2013."

"United Healthcare is committed to providing our customers access to quality health care through a broad network of physicians and hospitals at affordable rates," Shermach said in the statement.

According to a website that Memorial Hospital has designed for its patients to guide them through the negotiation process, the Belleville hospital explains that "United Healthcare's low payments to our hospital and our physicians is the key issue that must be resolved." The website also stated said that in the aggregate, United Healthcare pays Memorial Hospital and Memorial Medical Group physicians less than other insurance companies and in some cases less than the payments the hospital receives from Medicare. "This is simply not acceptable, nor is it fair," according to the website.

Neither United Healthcare nor Lanius would disclose specific terms of the contract negotiations. Lanius said that, "Overall, we don't feel like the payment levels that are there are not high enough compared to other payors in the marketplace."

Like Memorial Hospital, hospitals across the country allocate time and resources over months, and sometimes years, to negotiate new contracts with health insurance providers. Shermach said both parties must agree on a rate schedule for reimbursement when services are provided, and then sign a contract to that effect.

Lanius said the process ends up being a compromise as the two sides evaluate the payments that have come in and how they compare to others.

"Every hospital has a number of managed care contracts, and those will come up and periodically expire or come up for evaluation," he said. "I'm sure every hospital has a different process or approach to it. All of those contracts have pretty detailed in-patient and out-patient services in how they are specifically reimbursed ... It's always give and take."

The News-Democrat contacted St. Elizabeth's Hospital in Belleville last week and asked if the hospital was currently in negotiations with any health insurance providers at this time. The hospital had not responded as of Friday.

Lanius also said failure to reach a new contract will cost the hospital patients. He estimated that as many as 10 percent of Memorial Hospital's in-patients have United Healthcare coverage.

"Certainly there will be some loss of patients," he said. "Some patients will elect to switch plans that can continue to access Memorial and access Memorial Group Physicians, but that is probably not possible in all cases."

According to United Healthcare's website, the insurer serves more than 40 million people, contracts directly with 780,000 physicians and other health care professionals and 5,900 hospitals and other care centers nationwide.

"We want to have a contract," Lanius said. "It continues to be our goal to have one, and we have been working with them over three years to get a contract we can live with."

Contact reporter Will Buss at or 239-2526.

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