The roots of the dispute with UnitedHealthcare go back to 2009, when a Florida physician group called Sheridan Healthcorp signed a multi-year contract with the insurer. Through a series of acquisitions, Sheridan became part of what is now Envision Healthcare, bringing more and more doctors under the umbrella of that contract.
That contract surfaced in a lawsuit that Envision filed against UnitedHealthcare in March, a case that offers a rare look at the behind-closed-doors maneuvering that determines medical prices.
According to Envision's lawsuit, UnitedHealthcare failed to pay newly acquired medical groups under the contract as Envision expanded its footprint. Envision said that decision “hurts patients financially, while saving UnitedHealthcare money at the patients’ expense.”
UnitedHealthcare countered in legal filings that “the addition of Envision and its numerous subsidiaries served to drastically expand the scope of specialties far past those originally contemplated” by the contract. The insurer also accused Envision of “an improper game of hide-the-ball” to boost profits without proper notice of price hikes. The lawsuit was sent to private arbitration, which is ongoing.
Price hikes were part of the playbook for Envision and its predecessor companies. Agreements with large insurers typically lasted several years and “often provide for annual increases in reimbursement rates,” according to AmSurg’s 2015 annual report.
A redacted copy of the disputed 2009 contract shows that UnitedHealthcare originally agreed to pay 80 percent of eligible charges. That’s a structure insurers typically try to avoid, because medical companies can set their charges as high as they like. “It’s very strange,” said Ginsburg, the health economist. “Insurers, if they’re negotiating, they want to negotiate a link to a hard number.”In November, after Bloomberg News inquired about the document, the companies asked the court to refile a copy of the contract with additional information withheld, because the original filing “inadvertently omitted” to black out the contract rate the companies agreed on.Both companies declined to comment on the earlier agreement.
If the companies remain at an impasse in January, UnitedHealthcare will be under pressure to shield its members from Envision’s bills, Ginsburg said, because it has little ability to steer patients to other providers.
UnitedHealthcare has said it will set up a hotline for patients to report unexpected charges from Envision and advocate dropping those charges. Envision’s Kneeley said the company preferred to remain in-network, but either way it expects to get paid.
“We’ll continue to see the patients, and then we’ll continue to seek reimbursement,” he said.
This article was provided by Bloomberg News.