Leveraging Charge-Master Rates Against PPO “Discounts”

A 50% discount off double the price? Or is it now a 50% discount off triple the price?

Cigna claims that “Memorial Hermann unilaterally raised the list price of its services” earlier this year and then “refused to engage in meaningful negotiations with Cigna that would bring rates for Cign customers in line with what the hospital system charges other customers…………..”

Major insurance co. to end contract with Houston’s largest health care system

Connecticut-based Cigna Corp. (NYSE: CI) plans to end its commercial contract with Memorial Hermann Health System, the largest health care system in Houston.

MINERVA STUDIO

By Olivia Pulsinelli  – Assistant managing editor, Houston Business Journal

Dec 16, 2019, 10:00pm CST Updated Dec 17, 2019, 8:36am CST

Connecticut-based Cigna Corp. (NYSE: CI) plans to end its commercial contract with Memorial Hermann Health System, the largest health care system in Houston.

The contract is slated to end March 16, 2020, but the action does not affect Cigna’s Medicare Advantage plans, according to a Dec. 16 press release from Cigna.

Cigna claims that “Memorial Hermann unilaterally raised the list price of its services” earlier this year and then “refused to engage in meaningful negotiations with Cigna that would bring rates for Cigncustomers in line with what the hospital system charges other customers,” per the release.

However, a statement from Memorial Hermann noted that the health care system offered to create a value-based program, in which hospital performance would help determine reimbursements.

“Unfortunately, Cigna has been unwilling to meaningfully engage with Memorial Hermann in the creation of value-based programs as an effort to collectively lower costs for patients across our service area,” Memorial Hermann said in the emailed statement. “While it is unfortunate that we have been unable to find common ground in this longstanding partnership to provide Houston employers and customers with competitive plans and rates, as always, we remain committed to maintain a cost of care that is line with the market and our community.”

Ending the contract could affect as many as 178,000 plan members and 1,460 affiliated doctors, according to the Houston Chronicle. Memorial Hermann is the largest Houston-area health care system, with 4,178 local licensed beds, according to the latest Houston Business Journal research.

However, some patients undergoing treatment for certain conditions might be able to get an extension for in-network benefits after March 16.

“Cigna customers receiving ongoing care for certain conditions may be able to continue their care at Memorial Hermann at the in-network benefit level for a set period of time under their plan’s continuity of care guidelines,” the release notes. “Cigna customer service representatives can also help with those arrangements.”

Cigna has the sixth-largest presence among health insurance companies in Texas, with a 3.52 percent market share statewide as of 2017, according to the Texas Department of Insurance.

Separately, Houston Methodist and UnitedHealth Group Inc. (NYSE: UNH), the largest health insurance company nationwide and second-largest in Texas, are in the midst of a similar dispute over costs.

Houston Methodist hospitals and facilities will be out of network for UnitedHealthcare’s Medicare Advantage and employer-sponsored plans effective Jan. 1, while Methodists’ employed physicians will be out of network starting April 1. Some 100,000 United plan members could reportedly be impacted. The parties have until midnight Dec. 31 to reach a contract agreement.

Meanwhile, Houston-based Kelsey-Seybold Clinic will be in-network for most Blue Cross and Blue Shield of Texas members once again for the first time in over three years now that the companies have reached a new agreement.

 

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