Caught in the Cross-Fire: Oxford Pressures Jamaica Hospital to Make Anesthesiologists Sign Contract

From the New York Times, a striking example of a patients and physicians caught in the cross-fire between managed care and a hospital, and of the sort of tactics used by large US managed care organizations these days.

One party to the conflict is Jamaica Hospital Medical Center (in New York City, not the Caribbean), described as serving "a largely poor population with many immigrants and a large number of uninsured patients." The other is Oxford Health Plans, now a subsidiary of UnitedHealthGroup. We have posted, most recently here, (and see links to earlier posts) about the leadership of UnitedHealth, whose CEO, Dr William McGuire, has amassed over $1.6 billion worth of stock options, the timing of the granting of which is currently being investigated by the SEC and a federal grand jury.

Here is the story:

In interviews and court papers, Michael D. Brown, a lawyer for Jamaica, as well as Mr. Rosen and other MediSys officials, gave the following account of the dispute; UnitedHealth and Oxford declined to respond because of the litigation.

Jamaica officials noted that the Oxford moves they object to happened after the July 2004 takeover by UnitedHealth, one of the nation's largest and most profitable health insurers.

In 2004, MediSys and Oxford negotiated new contracts to set the rates the insurer would pay to two MediSys hospitals, Flushing Hospital Medical Center and Jamaica. Oxford drafted the contracts, and MediSys signed them and returned them to Oxford. In each case, based on custom and verbal understanding with Oxford, it was expected that the insurer would sign right away, and that the contract would go into effect the following month.

But after a few months, MediSys realized that Oxford was still paying the old, lower rates, and it complained to the insurer. At that point, Oxford raised a new and unexpected subject: the anesthesiologists at Flushing Hospital.

Those doctors are not Flushing employees, but an independent partnership with an exclusive contract to provide anesthesia services at the hospital — a typical arrangement. The anesthesiology group does not have an agreement with Oxford to be part of its network of doctors. When Oxford members have surgery at Flushing, the anesthesiologists bill the insurance company for their full fees, not the lower rates Oxford would negotiate with in-network doctors.

In late 2004 and early 2005, when MediSys protested that Oxford was not abiding by its new contracts, Oxford responded by asking the hospitals to pressure the Flushing anesthesiologists to join Oxford's network. MediSys rebuffed that request, saying it was up to the anesthesia group to make its own insurance arrangements.

Oxford signed the contract with Jamaica on April 25, 2005 — almost four months after hospital officials thought the contract had gone into effect. But even then, Oxford did not start paying Jamaica the new rates.

On March 27, Mr. Brown received Oxford's first written response to Jamaica's complaints — an e-mail message from a senior vice president at Oxford. The message, included in Jamaica's court papers, was an offer to pay the new rates, both in the future and retroactively, on the condition that the Flushing anesthesia group make a deal with Oxford. MediSys continued to insist that it could not compel those doctors to join Oxford's network.

In early April, doctors and patients received letters from Oxford informing them that as of May 2, Jamaica would no longer be an Oxford provider. Doctors who had admitting privileges at other hospitals were told that they would have to take their patients elsewhere. Doctors who had privileges only at Jamaica were told that they would no longer be paid to treat Oxford members, and their patients were told to find new doctors.

Dr. Alan R. Roth, a family practitioner with many patients at Jamaica Hospital, said he had hundreds of Oxford patients who received such letters.

'A lot of these are low-income, elderly people who have heart disease and diabetes and arthritis, people who see a lot of different specialists, and they were panicked,' he said. 'And all of a sudden, they're told they can't go to all those docs at Jamaica they're used to seeing, who coordinate care with me.'

Jamaica complained to the state, and in April, it sued Oxford in State Supreme Court in Queens. Oxford agreed to keep doing business with Jamaica through Aug. 1.

It appears that UnitedHealth Group, through its Oxford subsidiary, was willing to hold hostage its relationship with Jamaica Hospital, and thus risk that many patients would have to find new doctors and many doctors would have to rearrange their practices, in order to pressure a single anesthesia group into signing a contract with Oxford.

These are apparently the sorts of tactics used by UnitedHealth that inspired UnitedHealth board member (and Columbia University Dean of Nursing) Mary Mundinger to proclaim "We're so luck to have Bill [McGuire]. He's brilliant." However, these tactics seem to conflict with the stated mission of UnitedHealth Group which includes as a goal "to improve access to health and well-being services" and to "simplify the health care experience."