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Vermont's largest hospital system and a massive insurance company are deadlocked. Thousands of patients are caught in the middle

A photo of a green sign that reads "The University of Vermont Medical Center" in the foreground, with a large brick building in the background. Patches of snow visible on the ground, several bare trees.
Kevin Trevellyan
/
VPR
Late last month, almost 2,000 Vermonters got letters in the mail saying that the University of Vermont Health Network would no longer accept their insurance.

It’s a 20 minute drive to the University of Vermont Medical Center from where Eliza Graves lives in Jericho, not far from where she grew up.

Graves is there a lot — between bad asthma and a genetic condition that affects her skin and joints.

Then, a few weeks ago, she was diagnosed with an extremely rare, aggressive cancer after doctors found a tumor the size of an orange on her pancreas.

“We'd set up a treatment plan, getting ready to start chemo, and then we got this letter,” she said. “All of a sudden, everything has just changed overnight.”

She was sitting at the kitchen table, reading cards from friends and family when she opened mail from her insurance company, UnitedHealthcare. It said that starting April 1, UVM Health Network would no longer accept her insurance. The news came as a shock.

“I was just floored,” she said. “I know from living here most of my life just how much UVM is part of the community.”

In the past few decades, UVM has bought up a handful of smaller hospitals and provider groups across the region.

“There’s really not any comparable options in the area anymore,” Graves said. “Meanwhile I see eight different doctors — maybe nine different doctors — at UVM.”

“It seems like they're pointing the finger at one another and blaming each other for the lack of negotiation or for dropping talks. The unfortunate fact is that folks like my family are caught in the crossfire.”
Jordan Calderara, Underhill

She is not alone. Jordan Calderara got the same letter in the mail. She lives in Underhill with her two young kids and husband.

“It listed all of the providers that I currently use under the med center umbrella, and listed alternatives which are completely not feasible given our location and just the fact of having to change specialists,” she said.

Calderara and Graves and hundreds of other Vermonters are expected to lose access to their doctors because the UVM Health Network and UnitedHealthcare can’t agree on how much the hospital system should be paid for the insurer's commercial plan, which affects about 1,800 people in Vermont, and hundreds of others in New York. (It does not impact people with United Medicare, Medicaid, or Empire plans.)

A UVM representative told VPR that their expenses have increased by 10 to 15% this year, between pay raises for staff, supply costs and drug prices. To cover their bills, they say they need to charge private insurers more.

Meanwhile, UnitedHealthcare has said the increase the hospital wants — somewhere in the range of 10% — is too expensive. In a statement shared with VPR, they said they don’t want to pass these price hikes onto their customers.

“It seems like they're pointing the finger at one another and blaming each other for the lack of negotiation or for dropping talks,” Calderara said. “The unfortunate fact is that folks like my family are caught in the crossfire.”

“They're gaining market power so they can say, ‘Look, we don't need you, we can drop you from our network and still do well.’ Because these patients don't have much choice, because they’re the only shop in town."
Ambar La Forgia, Columbia University

This problem of insurers and providers not being able to reach an agreement is becoming more common as medical providers consolidate, explains Ambar La Forgia, who studies mergers of health care corporations at Columbia University in New York.

“They're gaining market power. And so they can say, ‘Look, we don't need you, we can drop you from our network and still do well.’ Because these patients don't have much choice, because they’re the only shop in town," she said.

She says in these negotiations, there’s always competing narratives. In this case, UnitedHealthcare has said the UVM Health Network is more expensive than peer institutions, while UVM has said they’re “one of the lowest-cost [providers] in the nation.” Sorting through these claims is not straightforward.

“We don't have this information so it's hard to know who's right,” La Forgia said. “Every year, prices are going up. And we want health care organizations to be paid and compensated for the care they're providing, but at the same time these insurance companies are also pushing back against the rising cost of care.”

"We want health care organizations to be paid and compensated for the care they're providing, but at the same time these insurance companies are also pushing back against the rising cost of care."
Ambar La Forgia, Columbia University

These high prices are particularly bad right now. A UVM representative said inflation, usually around 2.5%, is close to 9% for the health care system this year and drug prices have risen by 14%.

“The cost of medical inflation this year is going to be staggering,” said Kevin Mullin, chair of the Green Mountain Care Board, a state group responsible for reviewing hospital budgets and health insurance premiums. “Somebody has to pay for that.”

Increasingly, Vermonters with commercial insurance end up paying these rising costs, according to Mullin, partly because hospitals don’t have many other options for raising revenue.

In this case, the state doesn’t have much power to intervene, because they don’t regulate this type of employee-sponsored plan. It falls under federal jurisdiction.

“We don’t really have any ties to UnitedHealthcare at all — we don’t have any levers to use over them,” Mullin said.

Both Calderara and Graves get their insurance through their partners, who work for companies based out of state.

If UVM and UnitedHealthcare remain at an impasse, Calderara plans to switch her insurance carrier at the end of the year. She’ll skip her appointments until then.

“The cost of medical inflation this year is going to be staggering.”
Kevin Mullin, Green Mountain Care Board

Graves does not have that option. She needs chemotherapy right away and said she’s already paid her deductible, and can’t afford to switch to a marketplace option.

These days, her husband is driving her to Dartmouth-Hitchcock Medical Center in New Hampshire to get treatment. It’s an hour-and-a-half trip, for appointments that can last most of the day, and sometimes require her to stay overnight.

She’s worried about the added expense of hotels, and pet sitters, and gas prices on top of everything else.

On a recent trip home, Graves started crying, thinking about doing this drive every week for the next eight months, or more, depending on whether the therapy works.

“It will be a huge part of our lives, and just so much more time than we initially planned,” she said.

She’s hoping UnitedHealthcare and UVM will come to a last-minute deal. Then, she might be able to transfer her care back to UVM in between chemo cycles.

As of now, UVM has said they’re waiting on an updated proposal from UnitedHealthcare.

UnitedHealthcare has said they were the last to make an offer.

Have questions, comments or tips? Send us a message or get in touch with reporter Lexi Krupp:

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Updated: March 16, 2022 at 7:14 PM EDT
A clarification was added that the dispute only affects people with UnitedHealthcare who get insurance coverage through their employer, and not people with United Medicare, Medicaid, or Empire plans.
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