Many thousands of people in East Hampton Town and elsewhere on the South Fork have received ominous letters about their health coverage recently because Southampton Hospital’s contracts with the two biggest providers of health insurance on the South Fork have expired.
Talks toward new contracts are continuing but coverage at the hospital will end for some people in a little more than a month if new agreements aren’t reached.
Though emergency care will still be covered, Empire BlueCross BlueShield policyholders will be considered out of network at Southampton Hospital starting June 1. On June 7, Oxford policyholders will be in the same boat.
Unless Southampton and the insurance providers agree to contract extensions or settle on new contracts, Oxford- and Empire-insured patients will need to pay out of pocket or find another hospital for non-emergencies. And if their network doctors have admitting privileges only at Southampton Hospital, patients also may need to find a new primary-care physician.
Hospital officials insisted this week that there is a good chance that agreements will be reached and that service to patients will not be disrupted. They noted that, after a fearful period for some patients, a temporary agreement was reached on Friday, April 25 between Oxford and Riverhead’s Peconic Bay Medical Center.
Their contract “termination period”—a state-mandated two-month “cooling off” period after the contract had expired—was set to end on April 30. But Mary McElrath-Jones, a spokesperson for Oxford’s parent company UnitedHealthcare, announced on Friday that both sides had agreed to a one-month extension while negotiations continued.
She said that Oxford would not agree to a contract that would require the company to raise insurance premiums. An Empire spokesperson expressed the same view.
The sticking point is reimbursement rates, or the amount insurance companies pay hospitals for the care they provide. Southampton Hospital officials say they are seeking rates that would be more equitable with the rates hospitals in western Suffolk and Nassau County receive. Southampton loses an average of $2,000 for every Empire-insured patient it admits because the rates are so low compared to the actual cost to the hospital, according to hospital President and CEO Robert Chaloner.
Rather than negotiating with Empire alone, Southampton was joined by Eastern Long Island Hospital in Greenport in an effort to consolidate their bargaining power. In fact, all three East End hospitals—Southampton, ELIH, and Peconic Bay—used to do all of their negotiating together under the auspices of the Peconic Health Corporation, which was disbanded in 2005. Now, following a state mandate, the three are reassembling that health corporation.
Peconic Bay was ineligible for the joint Empire negotiations because it has a standing contract with the company that it negotiated in a partnership with Stony Brook University Medical Center, said Paul Connor III, the president of ELIH and the spokesman for the Peconic Health Corporation. He noted that all of the hospitals participate in the Oxford negotiations.
“The goal here is to create a master contract among the three East End hospitals with all payers,” Mr. Connor explained.
Besides more favorable reimbursement rates, the Peconic Health Corporation, which has tentatively been named the Eastern Suffolk Health Network, is seeking to eliminate contract stipulations that act as “unnecessary barriers” to reimbursement. For example, Mr. Connor said, under the previous arrangement, a hospital might not be reimbursed if it did not notify an insurance company within 24 hours that it had admitted a policyholder.
While acknowledging that an agreement might not be reached, Mr. Connor said he was optimistic that, if negotiations continue with Oxford and Empire at the same pace, they will settle on new contracts before the termination periods end in June.
In the last two weeks or so, Empire sent out 14,000 letters to policyholders who live in Southampton Hospital’s service area or have used the hospital in the past year, according to Lisa Greiner, an Empire spokesperson. The letters advised members that, if their insurance is no longer honored at Southampton Hospital, they will still be considered in-network for non-emergency care at Peconic Bay Medical Center, Brookhaven Memorial Hospital, Stony Brook University Medical Center, and John T. Mather Memorial and St. Charles hospitals in Port Jefferson.
Empire’s contract with ELIH ends on April 30, and a patient will not be considered in network after July 1, Ms. Greiner said. Policyholders in that service area may soon receive a similar letter to those sent out in Southampton Hospital’s service area, she added.
For Oxford policyholders, non-emergency visits at Stony Brook University Medical Center and Peconic Bay Medical Center will be covered indefinitely, and at ELIH until July 1.
The letters that have gone out so far—from both Empire and Oxford—have rattled employers and employees, said Kevin Luss, an insurance broker with the Luss Group Inc, in Southampton Village. “I’m not an alarmist in any way,” he said, but he added that judging by how often his phone has been ringing, people are really unnerved.
It is an important time of year for the employers and businesses in the Hamptons, with summer nearly here, and they should be concentrating on providing goods and services rather than wondering whether their employees will have a hospital, he said.
The insurance companies were required by law to send out the warning letters, Mr. Luss acknowledged, but he said they serve another purpose besides notification: The letters get employers to put pressure on the hospital to settle.
Adding to the impact on employers is the fact that Melville-based insurance provider MDNY has been in the process of going out of business this year, Mr. Luss added.
MDNY ends service on May 31, according to the New York State Insurance Department, and many employers have opted to switch to another insurance company in anticipation of that. In most cases, Mr. Luss said, those businesses chose either Oxford or Empire.
A hotline to keep concerned patients up to date on negotiations has been set up by Southampton Hospital. To listen to a prerecorded message from Mr. Chaloner, call 726-3228. Information will be updated as necessary.