Oxford drops Riverhead hospital

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Oxford-insured patients who rely on Peconic Bay Medical Center in Riverhead might have to find a new hospital after April 30.

Though the Riverhead hospital has already entered into a termination period with Oxford, Southampton Hospital’s contract is about a month longer and Eastern Long Island has more than a year before expiration.

The contract between the health insurance company and the hospital ended on March 1, but in-network service will continue during the 60-day “cooling off period” mandated by the state. Oxford and the hospital are in weekly discussions to come up with a new contract, and both sides said they wanted to resolve the matter before there is a disruption of service.

If that doesn’t happen and “a patient comes here for elective surgery, they would be considered out of network and have associated out-of-network deductibles,” the hospital’s president and CEO, Andrew Mitchell, explained last Friday. “That is not true of emergency cases. Patients can still come to any of our hospitals and receive emergency services as though they were in network.”

The three East End hospitals are also negotiating with Empire Blue Cross Blue Shield. All three of their contracts have passed their expiration dates, but the hospitals have agreed to temporary extensions while they draft new contracts.

Under its current contract with Empire, Southampton Hospital loses $2,000 for each Empire patient it admits, according to hospital President Robert Chaloner. Eastern Long Island is not in the same boat as Southampton but still has unfavorable terms with Empire, Mr. Connor said.

At the heart of the contract dispute between Oxford and Peconic Bay Medical Center are the reimbursements that the hospital receives for the care it provides to Oxford patients.

“It would be a breach of our fiduciary responsibilities if we accepted rates that are below our costs,” Mr. Mitchell said.

On the other hand, Oxford will not agree to rates that will require the company to raise premiums, said Mary McElrath-Jones, a spokesperson for UnitedHealthcare, Oxford’s parent company.

In Mr. Mitchell’s view, the higher reimbursements should come out of United’s profit—$4.65 billion in 2007—rather than premiums.

Last month, the heads of the Riverhead hospital, Southampton Hospital and Eastern Long Island Hospital met with Oxford at Peconic Bay in Riverhead to negotiate with the insurance company. “Bringing these hospitals together collectively gives us a little more bargaining power,” said Eastern Long Island Hospital President Paul Connor III.

Until recently, the hospitals could not negotiate together because it could have violated anti-trust laws. But now, with the state’s approval, the three East End hospitals may fight together for better reimbursements. Mr. Connor said it is desirable for the hospitals to present a unified front.

Ms. McElrath-Jones said she cannot predict when Oxford and the hospitals will reach a resolution, but the company is encouraged by the fact that negotiations continue. “I think we’re on the road to coming up with a solution,” she said.

As small not-for-profits, the hospitals face a great challenge against multibillion-dollar private insurers, Mr. Connor said. Nonetheless, they are prepared meet that challenge. “We wouldn’t be doing this if we didn’t think the rates that our hospitals are getting are below market value,” he said.

Oxford sent a letter to employers last week to apprise them of the situation. Mr. Mitchell said since then he has received several calls from major business owners on the East End saying they would switch providers to one that includes PBMC if the matter is not resolved.

If PBMC and Southampton are no longer in-network options for Oxford subscribers, they can still use Eastern Long Island, Stony Brook and Brookhaven hospitals for elective-procedures and non-emergency visits, Ms. McElrath-Jones pointed out.

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