The Baptist Health system and United Healthcare Insurance Co. have not been able to reach agreement on a contract for next year, but retirees in the state's public school and state employee health insurance plans with group Medicare Advantage with prescription drug coverage through United Healthcare won't be negatively impacted, the director of the state's Employee Benefits Division told state lawmakers on Wednesday.
"Baptist will go out of network at the end of this month," Grant Wallace, director of the state's Employee Benefits Division, told the Legislative Council's Employee Benefits Division Oversight Committee.
Baptist Health, with 11 hospitals, is the largest non-profit healthcare system in Arkansas.
Wallace said United Healthcare sent out a letter about the development to members of the state's public school and state employee health insurance plans right before Thanksgiving, and he sent a subsequent letter to these members informing them they would not be negatively impacted by the Baptist Health system and United Healthcare not having a contract, starting January 1.
After the legislative committee meeting, he said about 4,300 retirees in the state's public school and state employee health insurance plan with group Medicare Advantage with prescription drug coverage could be impacted by Baptist Health system and United Healthcare not reaching agreement on a contract for next year.
Wallace told lawmakers United Healthcare's contract with St. Bernards Healthcare in northeast Arkansas ends April 30 of 2024, and those negotiations are continuing. He said St. Bernards has created a dedicated phone call for retirees in the state United Healthcare plan so that they are able to get updated information and understand their benefits,
"Keep in mind even if these go out of network our MAPD [Medicare Advantage with prescription drug coverage] plan has a provision in it that has no disparity between out of network and in network for our members as long as the facility and the provider still accept Medicare as a payment," he said.
Both the Baptist Health system and St. Bernards Healthcare have indicated they will still accept retirees in the state's public and state employee health insurance plans with group Medicare Advantage with prescription drug coverage and work out billing with United Healthcare, Wallace said.
State Rep. Aaron Pilkington, R-Knoxville, asked whether retirees in the state's health insurance plans for public school and state employees with group Medicare Advantage with prescription drug coverage going out of network would increase the costs for the state's plans.
Wallace said United Healthcare has assumed the liability for paying the claims, so it would not negatively impact the state nor increase its liabilities.
In response to a question from Sen. Missy Irvin, R-Mountain View, Wallace said there will be no financial impact to the retirees in the state's public school and state employee insurance plans with group Medicare Advantage with prescription drug coverage as long as the provider and the hospitals still accept Medicare and is still willing to accept them.
Irvin said "there is a reason why the contracts weren't signed because they are low-balling them on reimbursements.
"There is going to be a negative impact at some point to these people," she said.
Wallace reiterated that affected retirees won't pay more out of their pockets at these two hospitals.
Irvin said she wants the retirees in the state's health insurance plans with the group Medicare Advantage prescription drug coverage to know "it is not the providers' fault and there is a reason why they are not seeing you and it has nothing to do with them and it has everything to do with United Healthcare."
"To me this is a big deal," she said "What I don't want to see is somebody winning a contract with the state of Arkansas and then using that as muscle in contract negotiations."
Wallace said he has been clear with United Healthcare that "they do what is best for our members."
Irvin said doing what is best for retirees in the state's public school and state employee health insurance plans with group Medicare Advantage with prescription drug coverage is paying the people doing the work an appropriate amount of money for these retirees to receive quality health care.
Sen. Justin Boyd, R-Fort Smith, questioned whether negotiations are over between the Baptist Health system and United Healthcare.
"They are still talking," Wallace said in response.
He said he hopes there is an agreement reached between the Baptist Health system and United Healthcare in the next few months and Baptist Health system comes back into the network.
Afterward, a spokesperson for United Healthcare said in a written statement that "Our goal is to renew our long-standing relationship with Baptist Health to ensure the members we serve have continued, uninterrupted access to Baptist's hospitals and physicians.
"Unfortunately, Baptist continues to request double-digit price hikes that are neither affordable nor sustainable. We are proposing meaningful, market-competitive rate increases that ensure Baptist is reimbursed fairly. We are asking Baptist to work with us to reach an agreement that families and employers across Arkansas can afford," according to the spokesperson for United Healthcare.
In late November, Baptist Health spokeswoman Cara Wade noted the recent inflationary surge, Arkansas hospitals' "unprecedented rise in costs" for wages, supplies and pharmaceuticals, and those hospitals' low reimbursement rates.
"While Baptist Health continues to improve operational efficiencies and cost management, it is not enough to overcome the growing external cost pressures," she said.
"Over the past several years, Baptist Health has worked with our insurance payers to develop a path towards addressing the nationally low reimbursement rates. While we have found mutually beneficial ways to move forward with most payers, we have not yet been able to reach an agreement with all payers for 2024."
A spokesperson for United Healthcare said Wednesday in a written statement that "St. Bernards issued a termination notice to end our commercial and Medicare Advantage contracts in Arkansas, which do not expire until Spring 2024.
"United Healthcare is committed to continued good-faith negotiation and we urge St. Bernards to work with us over the next few months to reach an agreement that will ensure the people we serve have continued access to the health system's hospitals and providers," the spokesperson said.
A spokesman for St. Bernards said Wednesday that negotiations with United Healthcare are continuing and St. Bernards want to be paid for its cost of providing care.
During the legislative committee meeting Wednesday, state Sen. Kim Hammer, R-Benton, questioned how many of the state's Medicare-eligible retirees in the public school and state employee health insurance plans have opted for United Healthcare's group Medicare Advantage with prescription drug coverage instead of the plans' traditional Health Advantage coverage for calendar year 2024.
Wallace said he hopes to have these figures within the next week or so. The enrollment period for retirees in the state's health insurance plans for calendar year 2024 was in November.
Nearly two months ago, a consultant for the Bureau of Legislative Research reported that the number of Medicare-eligible retirees in Arkansas' health insurance plans, for public school and state employees, who are in the group Medicare Advantage with prescription drug coverage for calendar year 2023 is lower than the consultant projected.
At that time, Patrick Klein, vice president of The Segal Group, said he hoped the ranks of the eligible retirees in these plans who enroll in the group Medicare Advantage with prescription drug coverage plan increases, which would increase the savings for retirees and the state.
Retirees who are 65 or older, or who are otherwise eligible for Medicare, were automatically enrolled in the Medicare Advantage program and were given the opportunity to opt out of Medicare Advantage and retain their existing benefits through Health Advantage from November 2022 through January of this year. State officials said the benefits offered under Medicare Advantage mirror existing benefits but also offer additional services and benefits.
Klein said the consultant assumed 75% of these Medicare-eligible retirees in the state's health insurance plans for public school and state employees would enroll in the group Medicare Advantage with prescription drug coverage for this calendar year.
But he said the group Medicare Advantage with prescription drug coverage enrollment was only 52%, and the other 48% remained in the Health Advantage plan for calendar year 2023. A total of 16,750 Medicare-eligible retirees and spouses are in the group Medicare Advantage with prescription drug coverage compared to 15,323 who enrolled in the Health Advantage plan, he said.
In June 2022, the state Board of Finance approved a contract with United Healthcare to provide group Medicare Advantage with prescription drug coverage for eligible retirees in the state's health insurance plans for public school and state employees. The state's Employee Benefits Division has contracted with the firm to offer Medicare Advantage in calendar years 2023, 2024 and 2025. The firm is one of three companies that submitted bids for the contract.
Information for this article was contributed by Aaron Gettinger of the Arkansas Democrat-Gazette.