United-TeamHealth snafu may have industrywide effects: Moody's

A contract dispute between UnitedHealth Group and physician staffing company TeamHealth could indirectly affect hospitals and other providers, according to credit rating agency Moody's Investors Service.

UnitedHealth is set to end high-reimbursement in-network contracts with TeamHealth. The change would take effect between Oct. 15, 2019, and July 1, 2020, and affect contracts across 18 states. Earlier in 2019, UnitedHealth reduced TeamHealth's reimbursements for certain out-of-network claims by about 50 percent, prompting TeamHealth to sue UnitedHealth in eight states, according to Moody's.

To understand the implications of UnitedHealth's feud with TeamHealth, Moody's analysts examined a similar dispute between Nashville, Tenn.-based Envision Healthcare and UnitedHealth. In the end, Envision agreed to lower reimbursements, resulting in an earnings decline for Envision. Moody's estimates TeamHealth's revenue would decline if it too agrees to a lower rate.

Notably, Moody's said by canceling higher-rate in-network contracts, UnitedHealth would essentially lower median reimbursement rates in certain areas. As current proposals in Congress aim to address surprise medical bills by paying out-of-network providers a median or market rate based on in-network rates for providers in the same area, lower rates from UnitedHealth would pull down the median industrywide.

Additionally, increased pressure on physician staffing companies like TeamHealth would indirectly affect hospitals, Moody's says. Should staffing companies receive lower reimbursements from payers, the firms would likely seek higher subsidies from hospitals.

"Disagreements between insurers and staffing companies could also disrupt hospitals if staffed physicians are no longer in-network. Unless legislation to curb surprise billing is implemented, patients could be on the hook for out-of-network charges, raising reputational and social risk for hospitals," Moody's said.

More articles on payers:
BCBS Association's CMO resigns months after CEO announces retirement
Horizon BCBS sues physician advocacy group over 'smear campaign'
What 5 physician execs have to say to other MDs seeking payer leadership roles

© Copyright ASC COMMUNICATIONS 2019. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.

 

Top 40 Articles from the Past 6 Months