One of the state’s largest health insurers has told customers it will no longer pay for health care at Ephraim McDowell Regional Medical Center beginning next month, pending negotiations that now stand at an impasse.
Humana started sending out letters last week informing customers that McDowell will be cut from its network of providers Aug. 1. Humana insures state employees, which includes both working and many retired teachers.
In one of the letters from Humana obtained by The Advocate-Messenger, customers are told benefits will not change. The letter lists other hospitals still in the network, which include Fort Logan Hospital in Stanford, James B. Haggin Memorial Hospital in Harrodsburg, St. Joseph Jessamine and the Lexington facilities Central Baptist Hospital, St. Joseph Hospital and University of Kentucky Chandler Medical Center.
Some people with certain medical conditions would be able to continue using McDowell with the same level of reimbursement for a specified amount of time if they fill out a form included with the mailing.
On Sunday, Ephraim McDowell Health began running a full-page advertisement in the newspaper in the form of an open letter signed by President and Chief Executive Officer Vicki Darnell. In the advertisement, Darnell says Humana notified the hospital the company intends to reduce payments by 23 percent.
“The ramifications of this decision would be serious for Ephraim McDowell Health and also the thousands of Humana members who depend on us for their health care,” the advertisement states. “You may have to select a new physician. You will have to travel for your health care resulting in more time off work or out of school. Worst of all, we fear some will not see a physician due to the inconvenience created by Humana’s decision.”
Humana spokesman Marvin Hill responded to an interview request from The Advocate-Messenger with the following statement via email:
“We have attempted to negotiate a fair and market-competitive contract with Ephraim McDowell Regional Medical Center, and we are committed and hopeful that we can come to acceptable terms prior to Aug. 1.”
Crystal Staley with the Kentucky Personnel Cabinet said the cabinet’s Department of Employee Insurance contracts with Humana to provide a network of medical providers and process claims for the Kentucky Employee Health Plan.
However, Staley said the department doesn’t participate in contracting with or credentialing of the medical network and referred questions about how the negotiations could impact state workers to Hill.
If the two sides do not reach an agreement, Darnell said the changes would only impact services provided by the Danville hospital and its ambulatory surgery center. Fort Logan and other facilities operated by Ephraim McDowell Health, such as clinics, would not be affected Aug. 1.
Those with Humana insurance could not receive treatment at the hospital, and Darnell said the out-of-network costs would be drastically higher.
Paul Smiley, president of the Boyle County Retired Teachers Association, said he has fielded numerous calls from a constituency that includes nearly 400 members. Most of the communication has been from those worried about having to leave the county to get care.
Smiley has been in frequent contact with the Kentucky Retired Teachers Association and has been assured the changes Aug. 1 will not include retired teachers over 65 who are part of the Kentucky Teacher Retirement System’s Medicare Eligible Health Plan. However, retirees under 65 and all those currently employed in local school systems would have to go elsewhere.
“We aren’t state employees, we’re retired folks,” said Smiley, who spent nearly 30 years as an educator and director of athletics at Kentucky School for the Deaf. “If this comes to pass, it wouldn’t just affect us, though, it would affect a lot of private individuals and private businesses.”
Smiley remains hopeful Humana and the hospital will be able to continue their relationship.
Darnell said the hospital provided about $36 million in health care that was never paid for over the last two years and is being asked to provide even more for significantly less from both private insurance and programs such as Medicare. She believes Humana is also failing to recognize the already large amount of uncompensated care, as well as the importance of the human factors involved.
“We are not a big city, and people have long-standing relationships with their physicians,” Darnell said. “The power and the strength of those relationships is huge for the patients as well as the physicians. I really feel Humana is discounting that.”
Although she said the hospital is in a strong financial situation, Darnell acknowledged losing the business from Humana customers would be a significant financial blow.
According to Bill Snapp, McDowell’s chief financial officer, there are about 9,200 Humana customers in the area who have access to the hospital. Humana accounts for about 10.5 percent of the hospital’s revenue. Snapp said some changes to the contract with Humana likely are warranted to bring the agreement in line with the current market, but decreasing payments in the amount Humana wants is too much too fast. He declined to divulge the exact level Humana currently reimburses for care but said each percentage-point decrease represents about $180,000 in lost revenue.
“We recognize we will have to come down some to meet them, but to expect us to go to 23 percent in one or two years would hurt the hospital and have a ripple effect in the entire community,” Snapp said, noting McDowell Health’s $86 million in cost for more than 1,500 employees.
While Snapp said the two sides have gotten closer to a 17 percent reduction during their ongoing negotiations, that amount still would represent more than a $3 million annual loss.
He said Humana’s offers have been inconsistent thought out.
Although both hospital and Humana representatives have left the door open for a deal, there apparently have been no talks for a couple days.