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May 19, 2008 6:06 PMPublication: The East Hampton Press

One negotiation resolved, another still going for Southampton Hospital

May 19, 2008 6:06 PM

To the relief of thousands of clients of Blue Cross who had received warning letters in April, Southampton Hospital settled on a new contract with Empire BlueCross BlueShield last week, guaranteeing in-network service at the hospital for Empire policyholders until the fall of 2009.

But as of yesterday, Tuesday, deadlines still loomed for thousands of South Fork residents insured by Oxford and who rely on Southampton Hospital or Peconic Bay Medical Center in Riverhead.

Unless the insurance company and the hospitals come to an agreement before the end of May, Oxford policyholders will be treated only “out of network” at Peconic Bay as of June 1 and at Southampton Hospital a week later. Though they will still have emergency coverage at the hospitals, the insured will need to pay their bills themselves or find an in-network medical facility for non-emergency care.

Southampton Hospital President and CEO Robert Chaloner said Friday that it is likely there may be a lapse in coverage but he predicted it will last no more than a couple of weeks.

Originally, in-network service was to end at Peconic Bay on May 1, but the hospital and Oxford agreed to a one-month extension while negotiations continued. Another extension is unlikely, Mr. Chaloner said. The insurance company, he asserted, asks for extensions repeatedly instead of resolving the issues. He said if that happens this time, the two hospitals are unlikely to accept another extension.

After Empire and Oxford both sent letters to their policyholders in Southampton’s service area in April to inform them of pending expirations—a step required by state rules—the hospital was flooded with calls, Mr. Chaloner said. Many called to pressure Southampton to settle, he said. The negotiations were too important to the financial stability of the hospital for it to back off its negotiating positions, he asserted. “This is life or death for us,” he said.

A spokeswoman for Oxford parent company UnitedHealthcare, Mary McElrath-Jones, said Monday that United continues to negotiate “in good faith” and hopes to reach an agreement that “will be acceptable to the hospitals while allowing Oxford to provide affordable health care.”

Ms. McElrath-Jones said that if the contracts with Southampton and Peconic Bay expire, policyholders will still have in-network access to Eastern Long Island Hospital in Greenport.

ELIH was involved in the negotiation Southampton just resolved last Wednesday, May 14, with Empire.

Southampton, Peconic Bay and ELIH have come together under the umbrella of the Eastern Suffolk Health Network to consolidate their bargaining power in negotiations and pool resources. Because the health network was formally recognized by the state only this year, the hospitals have yet to see the full effectiveness of joining forces, according to hospital officials.

ELIH is not involved in the health network’s Oxford negotiations because it has a continuing contract with Oxford. Also, Peconic Bay was not involved in the Empire negotiations because it has a contract with the insurance provider that it negotiated in a partnership with Stony Brook University Medical Center.

The health network’s aim is for all three hospitals to negotiate together with all insurers, according to spokesman Paul Connor III, who is also the president of ELIH. To that end, Southampton and ELIH sought and received a July 31, 2009, end date for their Empire contract, so they would match Peconic Bay’s expiration and could negotiate as a trio next year.

Mr. Connor said that the recent resolution of the Empire talks should expedite the Oxford negotiations, though he predicted most of the time will be taken up before the out-of-network deadline.

The biggest sticking point in contract negotiations is reimbursement rates, the amount of money health care providers receive for the care they give to insured patients.

Southampton Hospital chief financial officer Chris Schultheis said Friday that insurance companies have taken advantage of the East End hospitals because of their remoteness and small size. Companies with two to 50 employees pay the same premiums in eastern Suffolk County that they would in western Suffolk, yet they are paid less than western hospitals and doctors by the insurance companies, he said.

“They tell us ‘No, you’re not going to get as much because you’re little,’ and they tell our employers, ‘You’re going to pay just as much because you’re little,’” Mr. Chaloner claimed.

Mr. Schultheis said there is no question that, ever since a few years ago, when the three hospitals dissolved the Peconic Health Corporation—their last parent organization—they have been reimbursed at rates lower than any other hospitals on Long Island.

“We’re not asking for anything the other hospitals aren’t getting,” Mr. Chaloner said.

Though he said he could not give specific numbers being negotiated, he said Southampton’s new agreement with Empire goes about midway toward the rates the hospital is seeking.

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