Humana alleges CAMC wanted rivals out of network
Charleston Area Medical Center told Humana to drop Thomas Memorial and St. Francis hospitals from its network or risk losing CAMC's business, the insurance company alleges.
In a statement, Humana representatives said the ultimatum from CAMC is what led to a breakdown in contract negotiations Tuesday.
"CAMC made it clear their goal in negotiations with Medicare Advantage payers is to direct and steer volume to their facilities. This is best achieved when they are the only participating hospital system in the network," Humana representatives said in an unsigned statement emailed late Wednesday.
"It's Humana's strong preference to have both hospital systems in Charleston in our health care provider network - to preserve choice for our members in the area," the statement said.
"It became clear in our conversations that Humana could not achieve its goal of preserving contractual relationships with both hospital systems in the Charleston area."
CAMC executives would not comment Wednesday on why the negotiations fell through.
"I don't really want to go into any specifics," CEO Dave Ramsey said, adding that he did not want any "ill will" between the hospital system and Humana that would harm future negotiations.
Ramsey announced the contract change to the hospital's board of trustees at a meeting Wednesday.
Ramsey said the hospital system has not looked into how much money it will lose by the contract change.
Phone calls to Thomas Memorial spokeswoman Paige Johnson and CEO Steve Dexter late Wednesday were not immediately returned.
According to Humana's statement, CAMC notified the company in September it intended to leave the insurance company's network in 2013.
"We hope CAMC will reconsider its decision and remain in our network for 2013. We are committed to continuing discussions with CAMC," the statement said.
The contract with Humana will end Dec. 31, meaning senior citizens with Humana Medicare Advantage plans will not be able to receive services at "in-network" rates.
Humana is one of a handful of insurance providers in the state offering such plans, which seniors can purchase as an alternative to traditional Medicare.
Patients would still be able to get services at CAMC once the contract ends but would have to pay more because the hospital system would not be a member of Humana's coverage network.
State employees and retirees who receive Humana insurance through the Public Employees Insurance Agency will not be affected when the contract ends.
"PEIA will still be considered in-network," CAMC spokesman Dale Witte said Wednesday.
PEIA members are insured under a different contract than other Humana customers, according to the company's statement. In the PEIA contract, members do not pay more if they choose to receive services from out-of-network providers.
Witte said CAMC would continue to negotiate its contract with Humana, however, and could still reach an agreement.
"We're always hopeful," he said.
If the hospital system does not reconcile with Humana, patients receiving treatment at CAMC would have to transition their care to another hospital. Ramsey said it would be up to Humana to help patients switch services.
"Most of the (insurance) companies are very understanding of the situation patients are in," he said.
Witte told the Daily Mail on Tuesday the hospital system notified Humana in September it might terminate its contract. He said CAMC began talks with Humana in September so patients would have time to switch Medicare plans if they wanted to.
The open enrollment period for Medicare Advantage plans opened last week and closes at midnight Dec. 7. Once that deadline passes, patients are locked into their chosen Medicare Advantage plans until enrollment reopens next year.
Also at Wednesday's meeting, CAMC chief financial officer Larry Hudson announced the hospital lost more than $4 million in net revenue in September due to a nursing shortage.
Hospital admissions decreased by 9 percent last month. Hudson said the hospital system closed, on average, 45 beds each day among its three hospitals because there was not enough staff to cover them. CAMC Memorial Hospital alone closed an average of 25 beds each day in September.
In addition to the net revenue loss, CAMC's salary and wage expenses were $1 million over budget for September because of the nursing shortage. Hudson told board members the hospital did not reduce staffing fast enough when admissions dropped.
Ramsey said the hospital is not sure why the nursing shortage occurred but said it should end soon.
A recent class of about 120 nursing graduates will complete the hospital's orientation program in the next few weeks and will join the hospital's staff of full-time nurses. CAMC employs about 1,300 nurses.
"We don't want to give the impression people coming to the hospital won't have adequate nursing care. That's why we close the beds," Ramsey said.