Cigna and Houston Methodist Announce Contract After UHC’s Ended

Cigna and Houston Methodist announced a long-term agreement to cover patients and employees at the hospital.

“This new agreement is great news for all of the people we serve – the Houston employers, individuals and taxpayers who pay for health care,” James Hickey, president of Cigna's South Texas market, said in the press release. “I'm grateful to Houston Methodist's team for their true collaboration during this process and their commitment to reaching a forward-looking agreement that advances health care quality and affordability.”

The major insurer, which covers an estimated 500,000 lives in Houston according to local outlets, will now provide employer sponsored health plans for 26,000 Houston Methodist hospital employees. The contract goes into effect on July 1, 2020.

“This is also great news for our Cigna patients and our employees who know we will work together for a long time without disruption,” said Marc Boom, MD, president and chief executive officer of Houston Methodist. 

“We are pleased that Cigna recognizes the high value and quality provided by Houston Methodist, as both of our organizations are committed to providing our community access to unparalleled care. We know our employees will also be pleased to have Cigna administer our employee health plan.”

For those familiar with Houston Methodist’s recent contract history, the move has an extra layer of meaning.

When UnitedHealthcare ended its contract with Houston Methodist on January 1, 2020, UnitedHealthcare excluded Houston Methodist’s employees and certain Medicare Supplement patients. Thus, while 100,000 patients were suddenly out-of-network for Houston Methodist, a select group of patients and the hospital’s employees remained on UnitedHealthcare’s insurance.

“All of Methodist’s proposals have shown that it is intent on maintaining its position as one of the most expensive health systems in the country,” said a UnitedHealthcare spokesperson in an emailed statement to HealthPayerIntelligence. 

“It’s unfortunate that Methodist has been unwilling to actively participate in meaningful negotiations or to acknowledge that it’s driving up the cost of health care for the people of Houston and the health care system overall. Our top priority continues to be establishing a long-term relationship with Methodist that ensures our members have access to quality, more affordable care.”

The split was particularly contentious, as Houston Methodist broadly publicized its displeasure through billboards, television, and newspaper ads.

So it is unsurprising to some that the hospital decided to cut ties altogether with UnitedHealthcare.

Cigna and Houston Methodist have agreed to a multi-year contract, but have not shared the exact terms publicly.

UHC is embroiled in another nasty break with the provider group MEDNAX.

“The UnitedHealthcare statements are highly misleading. MEDNAX has engaged in numerous discussions with United regarding this matter, including as recently as February 13, 2020, and at United’s offices in Atlanta on January 21.  At no time were these discussions presented to MEDNAX as negotiations. Rather, United reinforced its unacceptable payment terms on a ‘take it or leave it’ basis,” MEDNAX told HealthPayerIntelligence.

And Cigna is not without its own contract disputes, such as its showdown with Dignity Health.

“This goes on all the time,” David Mescher, MD, a pulmonary and internal medicine specialist at an affected hospital, told a local news outlet while Cigna and Dignity were at odds. “This is just part of the negotiations.”

As of February 6, 2020, that dispute is still ongoing.

His straightforward statement demonstrates just how commonplace the problem is, but that does not mean it is without consequences.

Ugly contract disputes often leave patients paying significant surprise medical bills.

Thus, reconfiguring contract dispute resolution was a major component of policymakers’ latest efforts to prevent surprising billing.

The Ban Surprise Billing Act offers two methods for settling disputes based on the amount being disputed. If the amount is $750 or below, then a median in-network rate for that service for that area will serve as the benchmark for what each party can expect the payment to be. If it is $751 or more, the parties can engage in independent dispute resolution.

The Ways and Means Committee took a slightly different approach with its methods of resolution. Payers and providers would either do a thirty-day open negotiation process or have an independent, third party mediate the negotiations according to HHS standards.

In these contract negotiations, however, neither payers nor providers have full control of the narrative, sometimes leaving a confused and stranded patient population open to surprise bills. Thankfully for many patients at Houston Methodist, the drama has come to a close for the foreseeable future.