Insurer-provider contract impasses leave many patients without care

Every month for more than two years, Mary Beth Zolezzi traveled from her home in Fishers to a medical clinic on Indianapolis’ north side to get an infusion of a drug called Actemra to help relieve pain and swelling caused by arthritis.

“It helped a lot,” she said. “I had severe pain in my toes. It just helped with inflammation all over.”

But that changed this summer, when she received a letter from the clinic, Rheumatology Associates, telling her it was no longer in network with her insurer, UnitedHealthcare, effective July 1, ending a 20-year relationship.

The split came as Rheumatology Associates, a six-physician practice, had been seeking better reimbursement terms in a contract with UnitedHealthcare, to cover the higher cost of labor, drugs, supplies and other expenses.

But UnitedHealthcare had turned down the small medical practice’s last proposal and gave a counterproposal that was less than the current agreement, formed seven years ago, Rheumatology Associates said.

The standoff between UnitedHealthcare and Rheumatology Associates is not an isolated case. Around the country, the huge insurance company, a unit of UnitedHealth Group, the nation’s largest health care company, with $372 billion in revenue and 440,000 employees, has been dropping medical and hospital groups from its networks after failing to reach agreements on new contracts.

This year alone, UnitedHealthcare has dropped network coverage for thousands of patients who use University of Florida Health, Essential Health in Minnesota and several other physician and hospital groups.

In the process, thousands of patients are losing access to their doctors and often getting their care interrupted for months, until they find an in-network doctor or can appeal their case to the huge insurer.

“We have done everything within our power to preserve our contract with UnitedHealthcare, but we have sadly been unable to resolve our difficulties with them, as they have refused to extend the termination date as we request in order to continue negotiations,” said Rheumatology Associates’ letter to about 1,600 patients covered by UnitedHealthcare plans.

“We have only asked for increases that would cover the cost of doing business with them,” the letter continued. “Additionally, as everyone knows, inflation has negatively impacted all of us, with small businesses being hit very hard.”

‘A terrible situation’

Zolezzi, 79, a retired elementary teacher and office manager, said she was “surprised and furious” to get the news and has had to suspend her infusions while trying to get special permission from UnitedHealthcare to continue care—a process involving dozens of phone calls, all unsuccessful so far.

“I can’t afford hundreds or thousands of dollars a month for my infusions,” she said.

It’s a frustrating situation for providers, too.

“I think it’s a terrible situation, because our patients have been left almost uncared for,” said Dr. Sarah Thomas, who has treated Zolezzi for years, both at Rheumatology Associates and in her previous practices. “We have been trying to get them into other practices, but it takes a good six months to get them in, and some physicians are not taking new patients.”

The split-up is happening as UnitedHealth Group, based in suburban Minneapolis, is coming under federal investigation for possible antitrust behavior. In February, The Wall Street Journal, Reuters and Bloomberg reported that the U.S. Justice Department had launched an antitrust investigation into UnitedHealth, which is also a leading manager of drug benefits and operates a sprawling network of more than 90,000 physicians.

Investigators are especially interested in relationships between the company’s UnitedHealthcare insurance unit and its Optum health-services arm, which owns physician groups and other assets, The Wall Street Journal reported.

The Justice Department declined to comment and has not issued any statement on a possible investigation.

A UnitedHealthcare spokesman disputed Rheumatology Associates’ version of events, saying it had been negotiating in good faith but that the Indiana medical group made demands that were unaffordable.

“Rheumatology Associates issued a notice to end our contract and demanded a more than 30% price hike over the next three years, which was not affordable or sustainable for consumers or employers,” the UnitedHealthcare spokesman wrote in an email to IBJ. “We provided a counter that included rate increases, ensuring the provider group continued to be reimbursed at market-competitive rates.”

He continued: “Rheumatology Associates never responded to our proposal, allowing our agreement to expire and disrupting network access for Indiana families. We remain committed to continued discussions should Rheumatology Associates join us at the negotiating table and provide a proposal that’s affordable for the people and employers we serve.”

Tony Drykos, director of operations for Rheumatology Associates, put the blame squarely on the huge insurer, saying his small medical group, with revenue last year of $21 million, couldn’t afford to continue operating under the terms of a 7-year-old agreement while costs were going up every year.

He said UnitedHealth officials “dragged their feet” through negotiations and gave no indication they would not extend the current contract for a few months while talk continued.

“We had that assumption because that’s what they did the last time we negotiated with them, seven years prior,” he said. “We got to a point where we were at expiration, and they asked us to extend for 30 days, and then they asked for a second extension for an additional 30 days.”

A growing trend

Indiana physicians are keeping an eye on the trend of large insurers dropping medical practices from their networks, which they call a classic case of David versus Goliath.

“It’s a very worrisome trend,” said John Ruckelshaus, vice president of governmental affairs at the Indiana State Medical Association, which represents more than 9,000 physicians and medical students. “And when you start dealing with this monster, if you will, of an industry, it grinds the health care system to a halt in some respects, and the patient suffers.”

Some outside experts say most medical practices have very little leverage against health insurers, which are often huge, national corporations. The insurers can make demands in negotiating contracts and often require doctors to get prior authorization before they administer medical procedures, which can delay care for days or weeks.

According to a 2023 report by the American Medical Association, UnitedHealthcare is the second-largest health insurer in Indiana, with 15% of market share, behind only Elevance Health (the parent of Anthem Blue Cross Blue Shield of Indiana), which controls 56% of the market.

The larger insurers have the upper hand in almost all negotiations, said David Blish, director of health care consulting for Katz Sapper & Miller, an Indianapolis-based accounting and consulting firm.

“It’s almost a take-it-or-leave-it deal,” he said.

“They’re trying to dominate in a way they can dictate,” Ed Abel, retired director of health care practice at Indianapolis-based accounting and consulting firm Blue & Co., said of UnitedHealth Group. “If they control 30% of your business, you’re probably going to do whatever they tell you to do, particularly in today’s environment.”

Rheumatology Associates said it will survive getting dropped from UnitedHealthcare’s networks, as the split will affect only about 1,600 of its estimated 12,000 patients. But the split could be devastating for the affected patients, who got a three-day notice from the medical group in late June.

“We had a lot of phone calls with crying patients,” said Maureen Schoch, administrative director at Rheumatology Associates. “It was absolutely devastating from a medical standpoint.”

Dr. Kathleen Thomas, a physician at Rheumatology Associates, said it’s a huge burden for patients to get their care interrupted after months or years with one physician they have come to trust.

“Our patients have complex, systemic chronic diseases, and they’re on expensive medications, which are a challenge to get,” she said. “This adds to their burden if they’re able to pay the out-of-network fees in order to be able to continue their care here. That’s a lot for them, but for the patients who can’t do that, and they’ve been kicked to the curb, they can’t just go see someone.”

More than two months later, some patients of Rheumatology Associates are still trying to figure out where they can get medical care.

Brian Hollis, 51, a disabled Army National Guard veteran from north central Indiana who suffers from several types of arthritis, said getting dropped from UnitedHealthcare’s network means he can either pay more out of pocket for office visits and medications or try to find another rheumatology clinic in network.

“But I have not found one yet that has the same level of staff as” Rheumatology Associates], he said. He gets much of his care through Veterans Administration clinics but was referred to outside specialists for his arthritis treatments.

Steve McNeely, 78, a retired packaging company owner from Belleville, said he was surprised to get the letter from Rheumatology Associates but fought hard to keep his Medicare Advantage coverage through UnitedHealthcare. He also got help from an independent insurance agent he has used for more than a decade.

“She said, ‘No, you’re not going to quit,’” McNeely said. “We’re going to get to the bottom of this, and we’re going to get something figured out.”

They argued that his Medicare Advantage plan was a contract that should be honored by UnitedHealthcare. The insurer eventually agreed to cover treatments at Rheumatology Associates through the end of the year, at which point McNeely might have to find a new plan.

And Zolezzi said she hasn’t had an infusion in three months and is worried about her health. She said she has made countless phone calls to UnitedHealthcare but hasn’t been able to win her case that her coverage should be extended.

A few days ago, she visited Rheumatology Associates to give her doctor, Dr. Sarah Thomas, a hug and update her on the insurance situation. It wasn’t a medical visit, or Zolezzi would have had to pay about $150 out of pocket. Instead, they chatted briefly and said goodbye—at least for now.

“This has become a quagmire,” Zolezzi said. “An awful quagmire.”•