Updated February 24, 2023
Contract with University of Vermont Health Network set to expire April 1; Only commercial health plans are affected
We’ve been in discussion with the University of Vermont Health Network (UVMHN) in an effort to renew its contract for commercial health plans. If we are unable to reach an agreement, the health system’s hospitals, facilities and physicians will be out of network for employer-sponsored and individual plans, effective April 1, 2023.
Due to cooling off requirements, fully insured members in New York will continue to have network access to the health system’s New York hospitals through May 31, 2023.
Please note: Our Medicare Advantage and Medicaid contracts are not impacted by this negotiation and continue to remain in-network with UVMHN with no change regardless of the outcome of our commercial negotiation.
UVMHN is demanding a more than 15% price hike in one year and has informed us it will not move off its ask
Agreeing to the health system’s demands would mean the cost of care at its flagship hospital – UVM Medical Center – would have increased by more than 35% since 2020. These continued price hikes by UVMHN are not affordable or sustainable for the people and employers of both Vermont and New York and drive up premiums and out-of-pocket costs for our members as well as the cost of doing business for both self-insured and fully-insured companies.
Our goal has always been to reach an agreement that avoids any disruption to our members while holding true to our collective goal of ensuring health care remains affordable for the Vermonters, New Yorkers and employers we serve. That is why we have proposed meaningful rate increases to UVMHN that would ensure the health system continues to be fairly and appropriately reimbursed for the important care it provides to the people we serve.
UVM Medical Center is one of the most expensive hospitals in New England. Agreeing to the health system’s proposal would mean the cost of care at the hospital for people enrolled in UnitedHealthcare commercial plans would be more than 400% of CMS – or four times what Medicare would pay for the same service.
The cost of care at UVMHN is exorbitant and continues to rise at unsustainable rates for the people and employers we serve.
UVMHN’s high costs are further validated through third-party, independent data. According to an August 2022 article in the VTDigger that examined data from the RAND Corporation regarding the prices paid by health plans to hospitals, the cost of care at UVM Medical Center was 308% of CMS on average – or more than three times what Medicare would pay.
We recognize that UVMHN is an academic medical system and that some of the services it provides are unique and more costly. We reimburse them accordingly for these types of services. However, UVM Medical Center charges significantly more than other hospitals – even for common services and tests.
Consider these examples, which compare the rates UVM Medical Center is paid compared to the rates it accepts for patients on Medicare:
- A CT scan at UVM Medical Center costs more than 17 times what Medicare would pay.
- An MRI costs more than 13 times what Medicare would pay.
UVM Medical Center’s costs are also significantly higher than peer academic facilities in the New England market
The cost of care at UVM Medical Center is more than 20% higher than the average cost at another in-network academic medical center providing similar services less than 90 miles away.
UVMHN’s costs have increased as the system has used its market dominance to drive up prices
UVMHN acquired Alice Hyde Medical Center in New York in 2016. Since the acquisition, the hospital’s costs have increased by more than 50% for UnitedHealthcare employer-sponsored and individual plans.
UVMHN has been scrutinized for driving up costs by eliminating competition. According to a 2020 article in the Vermont Digger, UVM Medical Center holds 85% of the market share in the Burlington metropolitan service area. This market dominance has allowed the health system to continue to obtain unsustainable rate increases from insurers and to drive up costs for consumers.
A common measure of market concentration known as the Herfindahl-Herschman Index gives the health system’s flagship hospital a 7,225 score. Any rating over 2,500 is considered “highly concentrated,” according to Brent Fulton, a health economist for the University of California, Berkeley. A study by the National Bureau of Economic Research found that hospitals that do not have any competitors within a 15-mile radius have prices that are 12% higher than markets with four or more competing hospitals.
In a 2020 interview with the Vermont Digger, Dr. Paul Reiss of Evergreen Health stated he refers his patients to out-of-state providers that are longer distances rather than UVM Medical Center due to the high costs at the hospital. Dr. Reiss told the publication he sees people who decide not to seek care at all due to the high costs at UVM Medical Center. “People cannot afford their care,” he told the publication.
FAQs
If we are unable to reach an agreement, UVMHN’s hospitals, facilities and physicians will be out of network for employer-sponsored and individual plans, effective April 1, 2023. Due to cooling off requirements, fully insured members in New York will continue to have network access to the health system’s New York hospitals through May 31, 2023.
This negotiation only impacts employer-sponsored and individual plans.
Our Medicare Advantage and Medicaid contracts are not impacted by this negotiation and continue to remain in-network with UVMHN with no change regardless of the outcome of our commercial negotiation.
UVMHN is demanding a more than 15% price hike in one year and has informed us it will not move off its ask. Agreeing to the health system’s demands would mean the cost of care at its flagship hospital – UVM Medical Center – would have increased by more than 35% since 2020. These continued price hikes by UVMHN are not affordable or sustainable for the people and employers of both Vermont and New York and drive up premiums and out-of-pocket costs for our members as well as the cost of doing business for both self-insured and fully insured companies.
Our goal has always been to reach an agreement that avoids any disruption to our members while holding true to our collective goal of ensuring health care remains affordable for the Vermonters, New Yorkers and employers we serve. That is why we have proposed meaningful rate increases to UVMHN that would ensure the health system continues to be fairly and appropriately reimbursed for the important care it provides to the people we serve.
Unfortunately, UVMHN has refused to move off its unreasonable demands.
Unfortunately, UVMHN has refused to agree to a multi-year relationship for the past several years and has only proposed one-year contracts. We believe part of the health system’s goal is to use the threat of potential disruption each year as leverage in obtaining these continued unsustainable price hikes.
We have made numerous efforts over the years to reach multi-year agreements with UVMHN, including recently proposing a multi-year contract to the health system. Unfortunately, UVMHN refuses and is only proposing a one-year contract for the fourth consecutive year. These continued short-term agreements do nothing but create instability and unnecessary stress and anxiety for the Vermonters and the families we serve.
We remain open to negotiation should UVMHN provide a proposal that is affordable for Vermonters, New Yorkers and the employers we serve. However, given UVMHN’s refusal to move off its more than 15% price hike demands in just one year, we anticipate the health system will leave our commercial network on April 1.
We are committed to collaborating with the health system to ensure the people we serve have access to the care they need through either continuity of care or a smooth transition to a new provider in the event UVMHN leaves our network.
Reasonable and market-based rates protect consumers from the egregious prices that some providers charge, and the savings are returned to employers, labor unions, consumers and taxpayers in the form of lower health care costs. To illustrate how this works, consider a few critical facts:
We do not have a fully insured commercial plan in Vermont. That means that the majority of people enrolled in UnitedHealthcare commercial plans throughout Vermont and in northern New York are enrolled in self-funded plans, meaning their employers assume the risk and pay the cost of their employees’ medical bills themselves rather than relying on UnitedHealthcare to take on that risk and pay those claims.
As a result, any savings from negotiating more competitive rates with providers goes directly to our self-funded customers, which they can in turn use to hold premiums steady for employees or to lower them in some cases. Employers can also use any savings to enhance other benefits, increase salaries or otherwise help to grow their organization.
For health plans that require members to pay co-insurance for certain services, negotiating lower rates with providers means that patients pay lower out-of-pocket costs when they receive care from that provider.
Under the Affordable Care Act’s Medical Loss Ratio (MLR) requirement, any savings generated from negotiating lower rates from care providers that do not directly benefit our employer customers are spent on providing health care benefits for our members or are returned to ratepayers in the form of lower health care premiums or rebates.
Put simply, consumers, employers, labor unions, taxpayers and providers are all well-served when providers are reimbursed at fair and reasonable market-based rates.
If UVMHN leaves our network, our members will continue to have access to several hospitals and more than 1,000 physicians throughout the areas impacted. Hospitals remaining in our network include but are not limited to:
- Copley Hospital (VT)
- Gifford Medical Center (VT)
- Northwestern Medical Center (VT)
- Adirondack Medical Center (NY)
- Canton Potsdam Hospital (NY)
UnitedHealthcare members who are in the middle of treatment at a UVMHN facility or with a physician may qualify for continuity of care, which provides continued in-network benefits for a specified period of time after a hospital or physician leaves our network. A few examples of patients who may qualify include:
- Women who are pregnant (second or third trimester) through six weeks post-delivery.
- Patients with newly diagnosed or relapsed cancer, or those currently in active cancer treatment.
Members who have questions about continuity of care or alternative hospitals in their area should call the number on their health plan ID card. Members can also use the provider directory on our member website to search for alternative hospitals and doctors.
UnitedHealthcare members should always go to the nearest hospital in the event of an emergency. Their services will be covered at the in-network benefit level, regardless of whether the hospital participates in UnitedHealthcare’s network.