Cigna, Memorial Hermann have deal
An estimated 178,000 Cigna members will remain in-network with Memorial Hermann Hospital System after the insurance giant reached an agreement with the large health system.
Cigna and Memorial Hermann were set to part ways in March after months of inconclusive negotiations over hospital billing rates. Last fall, the insurer said it would terminate its contract with Memorial Hermann after list prices of its services rose “significantly” above market rates.
“We recognize the uncertainty these discussions created,” said Jim Hickey, president of Cigna’s South Texas market, “and we’re glad we were able to reach an affordable solution without interrupting access to quality care at Memorial Hermann.”
Throughout the spring, as COVID-19 spread around the world, both sides extended their contract temporarily — most recently through July 31. The new agreement will last several years.
“Our unequivocal and enduring commitment is to the needs and best interests of the people who live here,” said Dr. David Callender, Memorial Hermann’s president and CEO, “to be an advocate for Houston’s long-term health. This new agreement with Cigna is a reflection of that commitment.”
People covered by Cigna do not have to pay more under the new agreement; insurance plan pricing is set outside the system.
Before the pandemic, contract negotiations between Houston’s health systems and insurers had grown contentious. In October, UnitedHealthcare said it would drop Houston Methodist from its coverage, theoretically affecting 100,000 customers in the region.
In May, both parties announced that Houston Methodist would stay innetwork.
Community Health Choice, a local insurer, also announced in 2019 that it would drop Kelsey-Seybold Clinic.
The agreement comes at an uncertain time for both Memorial Hermann and Cigna, said Vivian Ho, a health economist at Rice University’s Baker Institute for Public Policy.
Hospitals are facing dire financial situations with the coronavirus pandemic and related recession driving down patient volumes and revenues. Memorial Hermann is one of the largest medical systems in the region, with 17 hospitals. It reported $190 million in net income and $5.5 billion in revenue in fiscal year 2019.
“Memorial Hermann has so many uncertainties in terms of the financial damage it’s going to experience because of COVID-19,” Ho said.
Meanwhile, rising unemployment rates across the country spell bad news for insurance companies. When employers lay off workers, their health insurance goes with them. An estimated 650,000 Texans lost employer-based insurance between February and May, according to recent research by consumer advocacy group Families USA.
Health insurers such as Cigna may be able to get some members back if they enroll in Affordable Care Act plans, although many won’t. Insurers also are working with companies to control costs and keep them as customers.
“They’re just locking in whoever they can,” Ho said.