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Employers in Orange County Looking for New HMO Contracts as St. Josephs and Some Others Begin Cancelling Agreements with Pacific

Posted Apr 18 2010 3:28pm

It has been a few years since United Healthcare purchased Pacificare, thus the name still exists and in some areas consumers have already been shifted to new types image of policies.  This conflict with St. Joseph has been ongoing for quite some time.  Many others are also dropping HMO type contracts to include UCI Irvine.  As mentioned Hoag is one who has remained in the HMO area and that hospital compared to many others has lot of cash reserves and maybe just does well as it is located in Newport Beach, a very upscale area of Orange County. 

As the article states, employers are now going to have to find alternatives for employees, either that or lean toward either Hoag or the Tenet hospitals in Orange County who are still working with capitated patient contracts; although some of the local IPAs with their contracts are either getting closer to a break even point or getting closer to crossing the line with some of their contracts and they administrate the HMO groups of patients.  Some IPAs rely on their Medicare Part D patients for their profitability as they break even on the regular HMO patients only.  image

The US Post Office in Orange County still offers the United Pacificare HMO to their employees and I wonder if that too will be affected.  When we get to the bottom of this it comes right back around to low reimbursement levels at the crux of the matter.  St. Josephs has been very active with technology and subsidizing the costs for their physicians on staff too and signed up to use Microsoft Amalga way ahead of many of the others, when it was still Azyxxi by name.

It’s kind of interesting that the one big insurance company that touts and promotes technology (Pacificare-United) in healthcare is the exact company that can’t negotiate and come to terms with hospital systems and employers that are doing so much in that area for patient care and has already made some real substantial investments and safety inroads.  

It is because the hospital system and employers are not doing things 100% “their” way perhaps in the areas of reimbursements?   BD   

Beckman is just one of many OC employers wrestling with what St. Joseph’s decision means for them. Earlier this month, the 420,000-patient health system said it plans to stop contracting with Santa Ana-based PacifiCare Health Systems Inc., the county’s largest HMO. While cutting ties with some HMOs, St. Joseph signed new pacts with Aetna U.S. Healthcare, Blue Cross of California, Blue Shield of California, and Cigna HealthCare of California and continues negotiating with Health Net.

Hoag Memorial Hospital Presbyterian in Newport Beach is the “only real tertiary facility that accepts PacifiCare,” Rayburn said. image

Companies not directly affected by St. Joseph’s decision are watching the situation. Aliso Viejo-based Fluor Corp., which is primarily self-insured, does not offer PacifiCare among its HMO options. But Joe Deacon, director of human resources, said the issues at the center of the St. Joseph-HMO dispute affect everyone.

Other large OC hospitals are mixed in their approaches to the contract issue. UCI Medical Center in Orange is dropping out of HMO contracting, while Tenet Healthcare Corp. and Hoag Memorial Hospital Presbyterian are leaning toward staying in the HMO business.

Fullerton-based Beckman Coulter Inc. sells medical diagnostic equipment to St. Joseph Health System, but come next year a few hundred Beckman employees and their families won’t be welcome at St. Joseph’s hospitals and doctors’ groups.

“Providers, in general, have been canceling capitated contracts, with the exception of MediCal,” Leyhe said. Leyhe attributed cancellations to a combination of “bad accounting and low reimbursement.”

Hoag still has capitated contracts, Foulke said, although he’s seen some trend toward shared-risk arrangements.

“I don’t think capitation will survive. There’s just not enough money,” UCI’s Rayburn said.

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