With UnitedHealth already set to end its “Obamacare” health coverage in Louisiana next year, the insurance giant is now pulling the plug early with Ochsner Health System, apparently forcing close to 3,000 patients in south Louisiana to decide between paying hefty out-of-pocket medical expenses or driving more than an hour to visit a doctor.
Taking Ochsner — Louisiana’s largest nonprofit health care system — out of the fold only five months into the 2016 health insurance period is going to be a hassle for UnitedHealth’s members in metro New Orleans, some state and health care industry officials said.
In some cases, patients may be severed from longtime physicians and specialists and instead forced to travel an hour or more for hospital care, they said.
The two companies said Friday they were unable to reach a compromise for Ochsner to continue in UnitedHealth’s public health insurance exchange program. In a statement, UnitedHealth called it a “routine renegotiation” of a contract.
Already, UnitedHealth members who relied on Ochsner faced being dropped at the end of the year. The nation’s biggest health insurer notified state officials this week that it will end its “Obamacare” health coverage in Louisiana after 2016, impacting nearly 29,000 people.
State-based health insurance exchanges were created as a result of the Affordable Care Act, as was a federal health insurance marketplace for states such as Louisiana that didn’t start exchanges on their own. Coverage was targeted at the uninsured and often offered sizable subsidies to make the insurance affordable for lower-income people.
UnitedHealth insures about 13 percent of the more than 214,000 Louisiana residents enrolled in the health insurance exchange. Nationwide, it covers 795,000 people under the exchanges.
In a letter to its local customers, UnitedHealth said members of its so-called “Compass” program would have in-network care available elsewhere in the state. But the six facilities it listed are all at least an hour’s drive from New Orleans.
Those facilities are Assumption Community Hospital in Napoleonville, Lady of the Sea General Hospital in Cut Off, Prevost Memorial Hospital in Donaldsonville, Teche Regional Medical Center in Morgan City, Terrebonne General Medical Center in Houma and Thibodaux Regional Medical Center.
Ochsner’s withdrawal from the network is effective May 15. In its own statement, the local company said it was “unable to reach mutually agreeable terms” to remain with UnitedHealth’s public health insurance program.
However, Ochsner didn’t completely rule out reconciliation, saying it is “open to discussions with UnitedHealthcare should anything change.”
At least one industry observer expects the two sides will go back to the bargaining table.
“That won’t last,” said Walter Lane, an associate professor at the University of New Orleans who studies health care economics. “There’ll be a shakeout. Somebody’s going to have to give on that.”
After taking part in nearly three dozen public health insurance exchanges in 2016, UnitedHealth will limit its participation to only a few next year, its CEO, Stephen Hemsley, said Tuesday. He said UnitedHealth expects to lose more than $1 billion on its Affordable Care Act-related business for 2015 and 2016.
In turn, UnitedHealth’s Louisiana customers will have to sign up with a new insurer during the 2017 open enrollment period, which runs from Nov. 1 to Jan. 31.
Several industry experts said Friday that having an insurer and a health care provider part ways in the middle of the year was unusual. But state Insurance Commissioner Jim Donelon downplayed the shake-up, saying that providers and insurers are free to make such changes at any time.
Donelon expects the impact “will be minimal.”
Some patients, such as someone who is pregnant or undergoing treatment for an acute condition, may be able to remain with Ochsner for an additional three months, he said.
“There’s no doubt that there will be inconvenience visited upon these folks as a result of losing their preferred or nearby, or both, health care provider, but the law allows for UnitedHealth to do this,” he said. “Obviously, they are doing it in order to cut their losses that they have been experiencing.”
But others suggested state law should be amended to ensure that contracts between insurers and health providers run concurrent with enrollment periods.
“They should have the opportunity to choose another plan that has their doctor,” said B. Ronnell Nolan, president and chief executive officer of Baton Rouge-based Health Agents for Change.
That idea would have the support of Preston Holton, who signed up for UnitedHealth’s public plan to hold him over until he turns 65 next year and will be eligible for Medicare.
In fact, Holton said, he was “madder than a wet hen.” The Uptown resident has used the same physician at Ochsner Medical Center in Jefferson Parish for several years.
“I have spent three days this week trying to figure all of this out in order to find out what I need to do in the event that anything happens to me after May 15,” he said.
While the deal’s collapse may be the first example of a health care provider’s contract becoming invalid midyear, industry observers predicted Friday that it may not be the last.
“It’s going to happen more and more, and if negotiations are not on the same contract timeline as open enrollment, you’re going to see this happen in more states across the country,” Nolan said.
Donelon backed that sentiment.
“Will it happen more often going forward?” he said. “If losses continue as they have been in the individual markets, I would not be surprised to see this replicated by other insurers in our market as well as other states.”
Follow Richard Thompson on Twitter, @rthompsonMSY.