One of Rhode Island’s largest medical practices is threatening to stop accepting UnitedHealthcare of New England members because it says the insurer is not paying doctors enough.
University Medicine Foundation Inc. says it sent letters in late June to 50 of the state’s largest employers, warning that because of United’s “extremely low reimbursement rates … we may be forced to either cut services or no longer participate with this major insurance carrier.”
Peter J. Ceriani, the foundation’s chief operating officer, said that the letters were sent to 50 employers that have at least some workers who are United members and who are patients of the foundation’s doctors.
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He said that the list includes CVS Corp., Hasbro Inc., Citizens Financial Group, FleetBoston Financial Corp., Verizon Communications, the city of Providence, several hospitals and nearly all of the state’s colleges and universities.
The foundation employs 140 physicians, all of whom are affiliated with Brown Medical School and are on the staffs of Rhode Island and Miriam hospitals (although the group is a separate entity from Lifespan). The staff includes primary care physicians, oncologists, gastroenterologists, infectious disease doctors and a number of other specialists.
If the practice withdraws from United entirely, the insurer’s members would have to pay medical expenses out of their own pocket and then seek reimbursement from United on their own, the letter says.
United spokeswoman Debora Spano said last week that United has an offer on the table that is “equitable and fair and meets our fiduciary responsibility to our customers.” She said United’s contract with the group remains intact.
“We want to reassure our customers and members that UMF remains in our network,” Spano said.
She added that United “works really hard to secure fair rates with hospitals and physicians that reflect the need to keep these spiraling costs down for our customers and members.”
The foundation claims that United’s reimbursement rates are an average of 22 percent less than what Medicare pays, which typically is seen as one of the lowest health care payers. United payments represent 15 percent of the practice’s revenue, Ceriani said.
United pays, for example, $47.50 for a 30-minute office visit, whereas Medicare reimburses $53.50, Ceriani said.
Spano said she would not discuss United’s reimbursement rates.
The Rhode Island Medical Society has said that sharply higher costs for malpractice insurance and health benefits and dipping federal reimbursement have exacerbated the effects of low reimbursement rates from HMOs.
The situation has reached “a crisis point,” Ceriani said, and has led to “an exodus of physicians and our inability to replace them.”
Nine of the group’s physicians have left the practice over the past two years as a direct result of low commercial reimbursement rates here, according to the foundation. Many have gone to states where commercial insurers pay more, Ceriani said.
Two hospitalists, who specialize in inpatient care, left for UMass Medical Center last year, Ceriani said. A pulmonologist left recently for a practice in Maine.
“He worked for us for six months and said, ‘This is nuts, the rates they pay here,’” Ceriani said.
In recent years, doctors have directed most of their complaints over reimbursement rates toward Blue Cross & Blue Shield of Rhode Island.
But Blue Cross and its subsidiary, Blue Chip, pay doctors more than United, according to an April report from the state Department of Health. The Blue Cross plans paid physicians a monthly average, per HMO member, of $68.95 and $62.02 respectively in 2001, while United paid $49.71, the report says.
“That just shows we either need to dramatically cut payments to doctors or they need to direct their attention to United,” Blue Cross spokesman Scott Fraser said after the report was released.
Blue Cross has made that a central argument when it comes to rate discussions with physicians – a key reason why United now is on doctors’ radar screen.
“Blue Cross will say, ‘Why come to us if you’re accepting lower reimbursement from United? You’re barking up the wrong tree.’” Ceriani said. “Now we’re barking up both trees so (Blue Cross) will stop using that argument.”
Blue Cross payments make up 50 percent of the foundation’s revenue, Ceriani said, while United accounts for about 15 percent of revenue.
In its letter, University Medicine Foundation tells employers that they should not equate higher payments to doctors with bigger health care premiums.
If rates are increased, the letter says, doctors could afford to spend more
time with patients. “That will likely reduce the need for expensive testing
and return visits to the doctor’s office … (and) your premiums should not go
up,” the letter reads.
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