HEALTH PLANS/HOSPITALS: United–not in enough trouble, goes looking for more

I don’t know what’s going on at UnitedHealth Group, but I am missing the strategic subtlety of this latest move. If I were trying to manage PR for the biggest and most profitable health plan in the country, and I found that my CEO had made hundreds of millions of dollars by (definitely unethically and presumably illegally) back-dating option grants, I wouldn’t want to see a major regional subsidiary written up in the New York Times about how it’s aggressively targeting one of New York City’s poorest safety-net hospitals. Apparently the hospital thought it had agreed a contract, but eventually they noticed that they were being paid at the old rate. When they enquired as to why, Oxford (which United bought in 2004) brought up other issues and the whole thing has since escalated to the close to nuclear option.

This spring, Oxford told hundreds of doctors and thousands of its subscribers that it would no longer pay for medical care at Jamaica Hospital Medical Center, and gave them a month to make new arrangements. It told some doctors that they, too, would no longer be allowed to participate in the Oxford plans, and it told many patients that they needed to find new doctors.

Now we tough Californians are used to this stuff—and usually used to the insurer losing. But the concept is new in New York apparently, and it’s just dreadful PR to use it on Jamaica hospital, which is that hospital in the run down part of Brooklyn that most wealthy Manhattanites only stare at out of the cab window when they’re heading to JFK

Kenneth E. Raske, president of the Greater New York Hospital Association, a trade group, said: "I field complaints from hospitals about insurers every day. But I have never seen anything like this." Jamaica Hospital, on the Van Wyck Expressway near Jamaica Avenue, serves a largely poor population with many immigrants and a large number of uninsured patients. It is generally considered well managed, but has had serious losses in recent years. Officials say it merely broke even in 2005.

There may be good business reasons for United to be doing this. Lord knows health plans have spent precious little time or effort in recent years trying to contain the excesses of the system on their clients’ behalf. But surely going after a hospital that relies on its better paying customers to keep the lights on for the poor is not going to generate the kind of PR that the company needs.

Is Mr Spitzer watching? I suspect so…

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9 replies »

  1. Sadly oxford should be investigated for stopping
    85 thousand customers in NYC from going to their
    former and now “Out of Network” hospitals such as’
    Beth Israel Medical Cntr. in NYC as of March 1st 3 NYC hospitals are now “out of network” such as Beth Israel Hospital Medical Center NYC.
    BIMC nor Oxford Health plans gave any upcoming news
    as to what we customers of Beth Israel and Oxford
    HMO should do now, How do we all of a sudden find a new
    hospital and new specialist for serious disease?
    On 3/01/10 we are covered on 3/02/10 we are”Out
    of Network”and “out of network” with no instructions of how to proceed with care at another hospital. This lack of concern by Beth Israel Hospital and Oxford HMO (a part of United Health care plans) stinks and should be investigated.
    Oxford was nasty on the phone when we called and said
    they sent us aletter that this would happen,wrong the letter said IT MIGHT happen if negotiations failed
    between OXFord and Continunumm Health Plans(CHP) we
    were NOT KEPT Abreast of these talks between the 2 parties and now on 3/02/10 we have a $1000.00 deductable
    for the very Dr’s we were seeing last week.
    A lousy surprise to be sure.

  2. I have been retired since January of 2005. I had COBRA from my former employer for 18 months, and then purchased United Health Care Insurance through AARP so I would be covered until I could apply for Medicare. It was easy to sign up, not so easy to get any coverage. I have purposely avoided any kind of yearly exams as it seems anything I do is considered preexisting and will not be applied to my deductible. I am paying $530/month for virtually no coverage and have been recently notified that my premium is going up to $567/month in 2008 – an “across the board increase in South Florida.” In May ’08, supposedly my “preexisting condition” time frame expires and I MIGHT be covered. By that time I will be able to apply for Medicare, I will have spent approximately $7,786 for virtually no coverage. Unless I had a catastrophic health event, I could never spend that much money in medical care in that period of time, as I am a relatively healthy person. Seems like a racket to me. I wish I had the nerve to discontinue health care insurance.

  3. As an employee of United Health Care, I am not surprised that they quoted rates for your technology firm and then increased them after the fact. Most of the people that I work with don’t have their coverage through UHC, only if they do not have a spouse to get coverage from. The cost is tremendous to employees whose salary is comparable to a cashier at
    Wal-Mart. For a salary of anywhere from $10-11 an hour, you need to fufill a coinsurance of $3000 annually, and a lifetime coinsurance of $9000 to receive any benefits on your health insurance coverage. I am aware that this amount is somewhat average for NY – but for the salary we’re paid from a multi-billion dollar corporation! it just doesn’t make sense that the employees of United Health Care are paying more for their coverage than UHC’s own customers.

  4. I retired before age 65 and was shopping for a policy for interim coverage. I called and explained this. They asked a few questions and acted like, no problem, just submit an application. I did so online, which required prepayment. In a denial letter they said no payment was made. It’s their company – they don’t know that applying online requires prepayment??? And don’t you know, you can get through on an 800 line to try to obtain coverage, but if you have a problem you have to incur long distance charges. I immediately wrote a letter. Meanwhile, the charge has remained on my bill for two cycles. It’s easy to see how this company makes money – nickel and diming their clients.

  5. I am the HR Director of a technology firm with several office across the US. In negotiating a new benfits plan, we selected United Health Care and finalized on rates and got the go ahead (from UHC) to start enrolling our employees in the plan. We were told that there would be no underwriting required given the size of our company. After the applications (that included a medical history) were submitted to to UHC – we received word that the rates originally quoted were no longer good and our rates would have a 48% increase. This is after our employees were told the original cost, AFB were loaded into our payroll system and our client billing rates.
    Our company was absolutely torpedoed by UHC and what the HR community aware of the bait and switch that occured.

  6. yeah, so my NY geography is screwed up! I am not against insurers trying to rationally limit hospital excesses….I’m just worried about United’s PR sense — which appears to be dreadful!

  7. One of the biggest things “wrong” with New York City hospitals is that on an given day, one-third of the beds are empty. Both the Democrats in New York City and Albany as well as Dennis Rivera and his SEIU membership have consistently stood in the way of reform because all they see are jobs, not inefficiency and excess costs. Everyone in the NYC market knows there is significant excess capacity in the hospital sector. Perhaps if much of this excess capacity were taken out of the system through selective hospital closures and downsizings, the remaining hospitals could operate more efficently and profitably. Hospitals are a high fixed cost business, afterall.
    Even though Mr. Spitzer is virtually certain to win the goverorship this Fall, he is shamelessly pandering to the hospital workers by trying to stop a belated effort by the Pataki Administration to form a commission to perform a rational assessment of hospital capacity throughout the state and make recommendations as to which facilities should close. The Commission is modeled after the Defense Department’s Base Relalignment and Closure Commission (BRAC) which has been able to bring about the closure of numerous surplus military facilities which federal politicians were unble to make happen any other way.

  8. Actually, I meant to say that Spitzer received the Democratic Party endorsement for Governor, which is a very different thing. The primary’s in September. Let’s not get ahead of ourselves now…

  9. Jamaica is in Queens, but otherwise you’re right on target. Jamaica Hospital is also well known for delivering high-quality care, which of course makes it an even riper target for assassination.
    Is Eliot Spitzer paying attention? Well, yesterday he received the Democratic nomination for governor, so he’s got bigger things to ponder this week. What you’re really asking is whether a Spitzer administration would act to rein in ugly behavior of the sort practiced by Oxford. The answer is, almost certainly. Consider the following passage from a Spitzer speech in January:
    “We also need to recognize that the imbalance of power between big insurance companies and health care providers has contributed to the financial distress of many hospitals. Something is wrong when our hospitals collectively lost $2.3 billion on hospital operations over the last seven years, while one for-profit insurance company made nearly $1.5 billion over the last year alone. The Health Department should respond to this imbalance by examining the ability of providers — hospitals and doctor alike – to negotiate effectively with ever larger, national for-profit insurance companies within the constraints of federal and state anti-trust laws.”
    I’m not sure what Mr. Spitzer is planning, but UnitedHealth had better watch its step.