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Why United Healthcare And Carolinas HealthCare System Couldn't Reach A Deal


In the Charlotte area, roughly 80,000 United Healthcare customers may have to find a new doctor. The health insurance company says that's how many people are affected by its contract expiring with Carolinas HealthCare System.

There are two sticking points that kept United Healthcare from renewing its contract with Carolinas HealthCare, one of the largest doctor-and-hospital chains in the country.

Garland Scott is United's CEO for the Carolinas and Georgia. He says the first point is how much the system charges his insurance company.

"Consistently, Carolinas is higher priced than almost all other systems in North Carolina," he says. "When we look in specific marketplaces, they're consistently 15, 20, 25 percent higher based on the latest proposals they've given us."

Executives for Carolinas HealthCare can't say for sure whether that's accurate because they don’t have everyone else's data. But Executive Vice President Dr. Roger Ray makes this point:

"We negotiate similarly with lots of different payers and don't get that response," he says.

If the system's costs are higher, Dr. Ray says look at what it offers.

"We have a level 1 trauma center," he says. "We have Levine Children's Hospital, Levine Cancer Institute. We do organ transplants. We do bone marrow transplants. We do research and clinical education."

Dr. Ray says patients have made it clear those are important services. 

The other sticking point is performance-based compensation. Garland Scott says United Healthcare wants to adjust what it pays based on quality metrics, like readmission rates.

"Nationally, close to 35 to 40 percent of our providers have adopted these standards," Scott says. "Those percentages are consistent in North Carolina."

At Carolinas HealthCare, Dr. Ray points out those sorts of standards are already in place - it's just that the federal government oversees them instead of United Healthcare.

"We just finished a three-year endeavor for the Centers for Medicare and Medicaid Services which was focused entirely on improving care and reducing the cost to payers," he says.

That project saved Medicare $48 million. Dr. Ray wouldn't say what's wrong with United's pay-for-performance model specifically.

The two sides haven't given up on replacing the contract. Carolinas HealthCare is allowing United customers to keep paying doctors and hospitals their old rates for the next few months. If there's still no deal, United customers will then have to find new doctors or pay a lot more.