Humana Medicare PPO members lose in-network access to Memorial Healthcare system as contract disputes disrupt patients [South Florida Sun-Sentinel]

France Karr woke up on April 1 preparing to arrive at Memorial Hospital Miramar for an important surgical procedure at 10 a.m.

At 6:30 a.m. she received a phone call from the hospital telling her that the procedure was canceled. It was no April Fool’s prank. The caller told Karr that the operation’s cost would not be covered because Memorial Healthcare’s contract to provide services to insurance giant Humana’s Medicare Preferred Provider Organization (PPO) members expired the night before after the two sides could not reach agreement on reimbursement rates.

That left Karr with two unappealing choices — stay with her preferred surgeon and pay sky-high out-of-network rates, or hunt for another surgeon at another in-network hospital willing to perform the procedure.

“I had a virtual nervous breakdown,” Karr said Tuesday. “I set the appointment two months eariler and had gone through all the preparation, had medical tests, examinations, and gathered my medical records.”

Karr is just the latest South Florida consumer left stranded by the failure of major health insurers and hospital systems to extend their contracts.

On the same day, at least 13,000 members of UnitedHealthcare’s various insurance plans lost in-network access to Broward Health’s facilities. And on June 1, nearly 1,500 South Florida residents living with HIV/AIDS will lose access to Broward Health’s hospitals if the public hospital system fails to extend its contract to provide in-network services to members of a Medicare Advantage plan run by the AIDS Healthcare Foundation. Neither dispute has been resolved, spokepersons said Tuesday.

Tense contract negotiations between insurers and providers are nothing new. In recent years, similar fights spilled into the public arena involving Blue Cross Blue Shield of Florida and Memorial Healthcare, UnitedHealthcare and Boca Regional Hospital, and Humana and Tenet Healthcare.

All were resolved within weeks of contract expirations, with insurance plan members’ in-network coverage reinstated retroactively.

Similar resolutions could still take place if the latest standoffs are resolved in coming days or weeks.

But for Karr and other members who need their procedures sooner rather than later, being caught in the middle of disputes between deep-pocketed entities that take in multiple millions of dollars a year can be infuriating.

When interviewed by phone on Tuesday, Karr was on her way to an appointment with another physician she hopes can perform the surgery at in-network rates, and she plans to see yet another physician in two weeks.

“Unfortunately, the surgeon I have a relationship with and who I truly wanted to operate on me has hospital privileges limited to Memorial Healthcare,” Karr said.

Even more maddening, she said, is that members of Humana’s Medicare Health Maintenance Organization (HMO) plans still have in-network access to Memorial Healthcare under a separate contract. “Ironically, my husband and I switched from an HMO plan to a PPO plan this year because we thought we were going to get better everything,” she said.

Generally, PPO plans provide more flexibility by enabling members to make appointments with in-network specialists without referrals from their primary care doctors, while HMO plans tend to cost less for members while offering a more narrow list of providers. In an HMO plan, members cannot see specialists without a referral from their primary care doctor.

Karr said she is unable to switch from her PPO plan to an HMO plan that includes her preferred surgeon because switches are only allowed during open enrollment periods. This year, open enrollment for Medicare Advantage plans ended March 31, the day before Karr learned she would no longer be covered for her procedure.

A Humana spokeswoman said the insurer sent letters to about 400 members who had used Memorial Healthcare facilities, warning that their in-network access to the system’s facilities could expire on March 31. Memorial, the dominant hospital system in southern Broward County, operates two hospitals in Pembroke Pines, two in Hollywood, one in Miramar and Joe DiMaggio Children’s Hospital in Hollywood.

Karr said she never received a warning letter. “If I had received it, I would have had plenty of time to resolve this by switching to the HMO plan.”

Contract cancellations stranding more consumers

Neither Humana nor Memorial Healthcare offered details about their dispute, other than to acknowledge that the Medicare PPO contract expired because they could not reach agreement on terms of an extension.

But typically such disputes — if the sides decide to air their grievances publicly — come down to insurers complaining that hospital systems are seeking excessive rate increases that would have to be passed along to individual members and employers that fund group coverage, and hospitals complaining that the insurer refuses to agree to the same rate terms that other insurers have accepted.

High-stakes hardball negotiations are not unique to South Florida.

Across the country, more and more disputes are resulting, at least temporarily, in contracts allowed to lapse and members stranded without in-network access to physicians they’ve been seeing for years, according to a November report by Kaiser Health News.

More recently, Blue Cross Blue Shield members lost access on April 1 to the University of Mississippi Medical Center, while Anthem, the largest for-profit managed health care company in the Blue Cross Blue Shield Association, notified its members that they will lose access to MaineHealth’s flagship hospital in Portland on Jan. 1.

Last year, contracts between major hospital companies and either Anthem or UnitedHealthcare were terminated in New York, Georgia and California before the sides eventually reached agreements.

Hospital systems flexing their muscles?

Linda Quick, former president of the South Florida Hospital and Healthcare Association, who now works as a health industry consultant, said she expects to see more such disputes between insurers and South Florida hospital companies because costs of operation are rising.

The region has too many hospital beds for the number of residents, she said. Excess capacity raises costs for hospitals because they still have to have their own buildings, state-of-the-art equipment, executives, doctors and nurses and everything else needed to run hospitals, regardless of how many or few patients they serve, she said.

“By having too many competitors for the same pool of sick people, it raises prices because the inputs are still there,” Quick said. “If they are underutilized for any reason, costs go up.”

Some hospital systems are operating their own Medicare Advantage plans and wouldn’t mind absorbing other insurers’ stranded members. Memorial Healthcare and Holy Cross, for example, last year introduced their own co-branded Medicare Advantage plan.

Allan Baumgarten, a Minnesota-based health market analyst, says “dominant local providers are flexing their muscles by making significant contract demands” on health plans who face pressures from consumers to keep those big hospital systems in their networks.

“Particularly with the Medicare Advantage business line, those providers believe that they control access to the patients,” Baumgarten said in an email. “Medicare Advantage enrollment has been growing steadily, and more plans try to enter local markets every year.”

Consumers tend to stay with the first plan they select at open enrollment time, he said, “so it’s especially important to Aetna and United and Blue Cross to have the right providers in network and to get those beneficiaries when they first age into Medicare or first decide to switch to Medicare Advantage.”

Hospitals contend that they are facing the same inflationary pressures as everyone else in the economy. Jennifer Smith, Broward Health’s associate vice president of marketing and communications, said hospital systems are experiencing “skyrocketing health care costs” that insurers are refusing to absorb “despite the billions in revenue they are accruing.”

In its November story, Kaiser Health News reported that U.S. hospitals are dealing with payment delays by Anthem and UnitedHealthcare. Anthem Blue Cross is behind on billions of dollars in payments, the story said, because of “onerous new reimbursement rules, computer problems and mishandled claims.” UnitedHealthcare, it added, is hitting hospitals with “retroactive claim denials” for emergency department care.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at [email protected].