UAB in Contract Dispute with United Healthcare
Recently, the University of Alabama, Birmingham Health System announced that it’s embroiled in a contract dispute with United Healthcare, which is the largest insurance provider in the country.
If this contract were to end, residents of Alabama would find themselves without network access to the state’s largest hospital, which happens to be the only facility with a Level 1 trauma center.
United claims to cover over half a million people in Alabama, but UAB says it serves roughly 1.4 million patients statewide.
“We will keep negotiating in good faith with United to come to a fair agreement,” stated Dawn Bulgarella, the CEO of UAB Health System, during the announcement of the current dispute.
Who Will be Affected?
This change extends to all UAB clinics, including services at St. Vincent facilities and pediatric services offered by UAB at Alabama Hospital. Essentially, this means patients covered by United Insurance will be “personally responsible” for costs incurred at these locations. It’s worth noting that patients with both United’s commercial and Medicare Advantage plans will be impacted.
For those enrolled in United Peehip Plans, UAB mentioned that while there could be minor variations in costs, they still provide coverage.
A comprehensive list of potentially affected entities can be found here.
When Will the Change Occur?
The deadline for UAB and UnitedHealth to finalize a new contract is July 31st. If no agreement is made, patients might find themselves “personally responsible” for costs starting from August 1st.
What is the Controversy?
Both UAB and United have been pointing fingers at each other over profit margins and rising costs, with each side launching statements and websites on the matter.
UAB cites a unified rejection rate and low payments as reasons for the dispute. In contrast, United sent a response to local news outlets, stating that UAB is “already one of the most expensive academic healthcare systems in the Southeast.”
“Still, UAB is seeking a double-digit increase in its commercial plans within a year and is aiming for a rise in Medicare Advantage Plan costs, which would make it one of the highest-cost providers in the country,” they added.
According to a newly created website by United, the fees UAB demands are outliers compared to similar health systems, making it pricier than all but one of the 25 academic medical centers in the Southeast.
United further explained that UAB’s recent acquisition of St. Vincent has, in fact, driven healthcare costs up for Alabamians, despite claims of cost reductions.
They also assert that UAB’s historical fee practices raise expenses for self-insured employers, who foot the bill for their employees’ healthcare rather than depending on UnitedHealthcare to settle claims.
United did propose extending the current contract for an additional 60 days to maintain access to in-network care, but UAB declined.
In response to these claims, UAB stated that they had requested a conversation about contract renewal a year ago, but United only responded recently—just 45 days prior to the notice of potential revocation.
Bulgarella, the UAB Health CEO, indicated that United’s approach aims to cut reimbursements for the services UAB provides.
She emphasized that UAB cares for the most critically ill patients in the state, and that United is already paying less than the cost to treat patients in UAB community hospitals, which has resulted in some hospital closures.
With Medicaid expansion not occurring in Alabama, UAB, as a public safety net hospital, provides over $100 million in care each year. They maintain that United reimburses fewer care providers than other insurance companies, leading to delays and refusals in payments to UAB Health System Care Providers.
This isn’t the first contract negotiation breakdown between the two entities. Back in 2019, UAB made similar announcements regarding its contract with United, but they managed to reach a resolution just before the deadline.
Is This Issue Only in Birmingham?
Interestingly, other hospitals across the country are facing similar challenges as UAB.
In Northern Alabama, the Huntsville Hospital health system issued a termination notice to United last October, though they eventually came to an agreement to stay in-network.
Meanwhile, in North Carolina, Duke Health raised concerns over low reimbursement rates from insurance providers, leading to similar contract disputes until they were finally resolved in November.
Just this week, North Mississippi Health Services ended its agreement with United’s Medicare Advantage Plans, citing frequent delays or rejections of patient claims.
What If You Have Questions?
Patients with inquiries about accessing healthcare services can call the number on their insurance card for more information. UAB has also established a website to address these issues, which can be found here.
