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UAB set to no longer accept UnitedHealthcare policyholders

July 26, 2019

MONTGOMERY, Ala. (AP) — UnitedHealthcare and the University of Alabama Birmingham Health System have failed to reach a contract agreement, potentially jeopardizing coverage for nearly 25,000 policyholders at one of Alabama’s largest hospital systems.

UAB entities, including the UAB Hospital, the Kirklin Clinic and Baptist Health in Montgomery, will stop accepting UnitedHealthcare insurance on July 31 and instead begin requiring patients to pay out-of-pocket costs if a deal isn’t reached.

The impasse emerged after months of negotiations and resulted in disagreements over the cost of care at UAB, which a spokesperson from UnitedHealthcare said is too expensive and hinders the ability for employers to design cost-effective, competitive benefits.

UAB Health System CEO Will Ferniany said the insurance provider has demanded their costs mirror smaller, less comprehensive providers across Alabama and is ignoring costs associated with treating the state’s sickest patients.

“We cannot allow United Healthcare’s demands to force us into an agreement that weakens our ability to deliver care to those who count on us,” Ferniany said in a statement as negotiations flagged earlier this month.

UnitedHealthcare Alabama CEO Nicholas Zaffiris said his company is still committed to “creating a long term relationship” with UAB but said they have yet to reach an agreement that reigns in costs, preserves consumer choice and promotes transparency.

UnitedHealthcare says UAB Hospital is significantly more expensive than other health systems and its cost of care is more than 50% higher than the average cost of other academic medical centers in Mississippi, Georgia, Tennessee and Louisiana.

But Ferniany said UAB is “different than community hospitals and less complex organizations offering limited services,” and pointed to UAB Hospital’s Level I Trauma Center that provides care for patients in critical condition and requires “significant and costly standby resources to operate.”

Ferniany also highlighted UnitedHealthcare’s $9 billion in earnings in 2018, saying “those profits come at the expense of its policyholders and health care providers.”

He added that the university is opposed to being labeled a “Tier 2” provider by the insurance company, which they say would make policyholders pay more to come to UAB. UnitedHealthcare, however, said “Tier 1″ status is earned by demonstrating the ability to deliver quality care in an efficient, cost-effective way and UAB has not qualified because of its high costs.

“We recognize and appreciate that some of the services UAB Health System provides are unique and more costly,” UnitedHealthcare spokesman Cole Manbeck said. “However, UAB Hospital charges significantly more than other hospitals even for common services and tests.”

Zaffiris said UnitedHealthcare exchanged its latest proposal with UAB Thursday evening and was told the university is evaluating that offer.

The emergency departments at UAB hospitals will continue to remain open to UnitedHealthcare customers regardless of the outcome of the contract negotiations.

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