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Ephraim McDowell Health, Humana reach agreement

Insurer's customers will still use Danville hospital

July 27, 2012|By DAVID BROCK | dbrock@amnews.com

After a turbulent and high profile negotiation process,Ephraim McDowell Health and Humana reached an agreement days before thousands of area residents would have had to look elsewhere for medical care.

McDowell’s chief financial officer Bill Snapp said the two sides signed an agreement Thursday that will keep the hospital in Humana’s network of providers and avoid an Aug. 1 deadline. If an agreement had not been reached, it could have had large ramifications for the many area residents insured through Humana, which includes all state employees and retired teachers under the age of 65.

“There won’t be any discontinuation of service for our patients, which ultimately is the most important thing,” Snapp said.

News about the rift began circulating at the beginning of July when Humana started sending letters to customers who had used McDowell recently informing them the hospital would no longer be in its network at the end of the month and suggesting other hospitals in the area. The change would have impacted only services at Ephraim McDowell Regional Medical Center, including the ambulatory surgery center.

Snapp said there are about 9,200 Humana members in the area who are potential hospital customers. He said Humana customers account for about 10.5 percent of the hospital’s revenue.

McDowell ran a series of full page advertisements in The Advocate-Messenger in the form of a letter from hospital chief executive officer Vicki Darnell lamenting how Humana’s reduction in payments for health care services would negatively impact patients and the hospital. Talks appeared to have broken down in mid-July, when Snapp said the two sides were still at odds about Humana’s initial proposal to reduce payments by 23 percent.

Snapp said Friday the result of a complex negotiation process amounted to Humana reducing payments for services by about 10 percent. In a July 10 interview, he said each percentage-point decrease represents about $180,000 in lost revenue.

The new rates will go into effect Oct. 1 and will be effective for two years. Customers likely won’t notice a difference in their coverage, but the hospital will have to continue looking for ways to get the most out of its resources, Snapp said.

“We are always trying to be more efficient in our operations and we will have to continue trying to be more efficient,” he said.

Snapp said the support from the community for the hospital had been overwhelming, pointing to the flood of calls from area residents to the Kentucky Personnel Cabinet about the issue. He said he didn’t anticipate any similar situations arising with other major insurers in the near future.

Representatives for Humana could not be reached for comment by press time.

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