Johns Hopkins All Children’s Hospital at an impasse with United Healthcare

May 30, 2017, 3:02pm EDT Updated May 30, 2017, 4:38pm EDT

Margie Manning Finance EditorTampa Bay Business Journal

Talks have stalled in the first contract renegotiation in more than five years between Johns Hopkins All Children’s Hospital and UnitedHealthcare, and more than 10,000 pediatric patients are feeling the impact.

As of May 11, the contract was terminated between UnitedHealthcare and Johns Hopkins All Children’s, said Dr. Jonathan Ellen, hospital president.

The insurer now considers hospital-based services and physician services at Johns Hopkins All Children’s as out of network, and is telling insured families — including UnitedHealthcare members who are employed by the city of St. Petersburg, Raymond James Financial (NYSE: RJF), Pinellas County including the school system, Wells Fargo (NYSE: WFC), Walgreens, Walmart, Ceridian and Charter Communications (formerly Bright House Networks) — that if they want the kind of specialized services the St. Petersburg hospital provides, they have to go to Orlando or elsewhere outside the region, Ellen said.

Any UnitedHealthcare member in active treatment for a serious medical condition with an All Children’s physician may qualify for Continuity of Care, which enables them continued in-network coverage for their medical care at All Children’s, according to a statement from the insurer, which is part of UnitedHealth Group Inc. (NYSE: UNH). Applications for Continuity of Care are due by June 9, the insurer said.

UnitedHealthcare will continue to cover trauma and emergency-related services at a member’s in-network benefit level, the statement said.

The contract termination follows Johns Hopkins All Children’s efforts to get large insurers “to pay their fair share of expenses” to cover the investments the hospital has been making as it builds itself into a preeminent system for children needing care in the region and in Florida, Ellen said. Those investments include a new research and education building and new surgeons and physician specialists, he said.

All Children’s is paid competitive rates that are in line with other specialty hospitals in the St. Petersburg area, UnitedHealthcare's statement said.

The hospital opened negotiations with United Healthcare in the fall, initially asking for a 60 percent increase in rates, which Ellen said was below market cost for services. While Johns Hopkins All Children’s has since come down to a 35 percent proposed increase, United Healthcare has not been willing to go higher than 20 percent, Ellen said.

A 20 percent rate increase will ensure Johns Hopkins All Children’s is paid competitively and is able to cover the cost of services, while ensuring the thousands of local employers who pay the cost of their employees’ medical bills themselves do not experience an unsustainable surge in their health care budget, UnitedHealthcare's statement said.

Rates are only part of the negotiation, UnitedHealthcare said. The hospital wants a contract that excludes "value-based care" or reimbursement that is tied to performance or quality measures, the insurer said.

The last time the two sides sat down at the table together, United Healthcare offered to increase their rate offering by up to 3 percent more, if reimbursements could be tied to quality metrics, said Sylvia Ameen, vice president for marketing, communications and culture at Johns Hopkins All Children's. While there are established quality metrics in adult medicine that are tied to Medicare, such measures don't exist in the pediatric world, and few other children's hospitals have agreed to that kind of provision in a contract with United Healthcare, Ameen said.

Johns Hopkins has launched what is being described as an aggressive campaign to shed light on the issue.

“We hope families will contact United Healthcare and tell them to go back to negotiate, and get John Hopkins All Children’s back in network,” Ellen said.

About 30 percent of the hospital’s patients are covered by commercial insurance, and of those, 20 percent are covered by United Healthcare, he said. The remaining 70 percent of patients are covered by Medicaid.

But about 30 percent to 40 percent of revenue comes from Medicaid and the rest from commercial insurers, he said.

Johns Hopkins All Children’s executives have talked to other commercial insurers about rate hikes and “in general, they are much more receptive,” Ellen said. No insurer is paying more than market cost, he said.

Other children's specialty hospitals in the Tampa Bay area that are in network are Children's Medical Center at Tampa General Hospital, St. Joseph's Children's Hospital in Tampa and Shriners Hospital for Children in Tampa, UnitedHealthcare said.

Margie Manning is Finance Editor of the Tampa Bay Business Journal. She covers the Money beat.

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