Rush Hospitals and UnitedHealthcare sign three-year contract
Rush System for Health has signed a three-year deal with UnitedHealthcare of Illinois that secures as many as a million new patients for the Near West Side hospital network as it continues to battle over rates with Blue Cross & Blue Shield of Illinois.
The contract begins May 1, 2012 and gives 1.1 million UnitedHealthcare customers in Illinois access to Rush Health, which includes Rush University Medical Center, Rush Oak Park Hospital, Rush-Copley Medical Center (Aurora), Riverside Medical Center (Kankakee), and the physicians employed by the healthsystem. UnitedHealthcare also entered into a new network relationship with the Rush Health physician group, which includes more than 780 physicians, and will be for all commercial lines of business.
About 8,000 UnitedHealthcare customers paid out-of-network prices in the last 12 months to seek care at Rush’s flagship medical center.
Now, customers will have access to Rush through all of UnitedHealthcare’s commercial products, including include HMO and PPO plans. The contract does not include Medicare beneficiaries.
The deal rekindles a relationship between Rush and UnitedHealthcare that ended 12 years ago when the two organizations couldn’t agree on financial terms. That agreement had been in place for more than five years.
Rush was the only large Chicago-area health system that didn’t have a contract with UnitedHealthcare.
UnitedHealthcare, a subsidiary of Minnetonka, Minn.-based UnitedHealth Group, has 1.2 million customers statewide.
Adding Rush helps UnitedHealthcare fill a void as the insurer looks to grow its local market share, said Steve Riedl, a Chicago-based senior consulting actuary for Towers Watson, a New York-based consulting firm.
The new deal comes as Rush and Blue Cross work under a short-term agreement extending coverage until the end of the year for patients in the insurer’s most lucrative plans as negotiations continue over a long-term agreement.
Their prior contract, which set reimbursement rates for patients in Blue Cross’ Illinois PPO and non-risk-based HMO plans for Rush’s Chicago and Oak Park campuses, expired on Dec. 31.
The UnitedHealthcare deal would soften the blow to Rush if it loses its contract with Blue Cross & Blue Shield of Illinois, although the Chicago-based insurer is the largest in the state, with three times the market share of UnitedHealthcare.
“Losing Blue Cross and replacing it with United is a significant net loss to Rush, if that’s how it turns out,” Mr. Riedl said.
For the last six months of 2011, Rush received 26.3 percent of its patient revenue from Blue Cross, more than any other payer besides Medicare.
A Blue Cross spokeswoman declined to comment.
Mr. Estes hopes the new contract with UnitedHealthcare will help draw patients to Rush University Medical Center’s 304-bed, nearly $700 million hospital, which opened in January just south of the Eisenhower Expressway.
“We are hoping for significant patient growth,” Mr. Estes said.
He added that UnitedHealthcare customers have been using Rush University Medical Center despite having to pay more out of pocket. Now, Rush will be paid less for out-of-network prices patients because the system has negotiated rates with UnitedHealthcare, but hopes to make up the difference with greater volume.
Mr. Wiffler said one of his goals when he became CEO five years ago was to strike a multi-year contract with Rush, making it a key part of the insurer’s growth strategy.
“There have been customers who have otherwise wanted to come to United but couldn’t or didn’t because we didn’t have Rush in our network,” Mr. Wiffler said. “This opens virtually the entire market for us … from small employers to large, jumbo national accounts.”
Prior to signing the new contract, Rush had agreements with UnitedHealthcare to cover Chicago Public Schools employees, a Chicago law firm and two school districts in Aurora. Those contracts remain in place.
Those contracts were “the foundation” for the broader, new three-year agreement, Mr. Wiffler said.