Deal out of reach, UTMB will end Aetna contract
GALVESTON — The University of Texas Medical Branch will terminate its contract with Aetna effective next spring, with the two sides unable to come to a contract agreement after four years of negotiating, according to the system’s interim president, Ben Raimer.
Raimer announced the end of the medical branch’s relationship with Aetna during a conference call Thursday, saying the health insurance provider no longer reimbursed the system at competitive rates.
“We’ve had the same contract (with Aetna) for the last 10 years,” Raimer said. “You knowthat your medications, the things that you’re being treatedwith, have increased in cost. And yet, we have not been able to have the cooperation of Aetna to cover those things that have gone up. So the best thing that we can do at this point is just say, ‘ We enjoyed working with you the last 10 years. We need to move on and work with people who will work with us.’”
Aetna, one of the nation’s leading health insurance providers, insures roughly 39 million people, with a network of about 1.2 million health care providers and more than 5,700 hospitals. In a statement, a company spokesperson indicated the insurer was caught off guard by UTMB’s announcement.
“We are surprised to learn today via UTMB’s press release—after many months of silence from UTMB—that UTMBhas decided to terminate its commercial contract with us. Aetna maintains open communication with UTMB
and is disappointed that this was brought to our members’ attention before Aetna’s.”
Contentious negotiations over the pricing of medical care have driven several contract termination announcements in recent years. Houston Methodist and United Healthcare, and Memorial Hermann and Cigna, planned to end their contracts last year but ended up renewing in 2020. In October, Common Spirit Health, the parent organization of several Texas-based health care providers including CHI St. Luke’s, said it will terminate its contract with Blue Cross Blue Shield of Texas. CHI St. Luke’s will also end its contract with Molina Healthcare by Nov. 25.
Roughly 16,000 people who rely on the medical branch’s system — which includes campuses in Galveston, League City, Clear Lake and Angleton — are covered by Aetna, which makes up fewer than 5 percent of UTMB’s total patients.
The medical branch’s contract with Aetna will officially terminate May 6. The contract termination does not affect patients who have a Medicare Advantage plan through Aetna. Cheryl Sadro, UTMB’s chief business and finance officer, said therewould be an additional grace period for patients covered by Aetna to continue any care in progress, such as cancer treatment.
“Anyone that is in a course of care with us after or on May 6 will get 90 days of in-network care,” Sedro said. The medical branch will also work with individual patients to help identify other health care resources.
The medical branch walking away from Aetna comes at a time when the system is struggling financially, with a $174 million budget shortfall projected for the next fiscal year. The system announced in September plans to lay off 200 employees — about 15 percent of its workforce — in part because of the COVID-19 pandemic forcing its hospitals to cease all nonessential medical procedures.
In April, UTMB also eliminated overtime pay and asked its employees to take one day off every week using vacation or other paid time off. Employees who were eligible for incentive and bonus pay — nearly 400 of the medical school’s 900 employees, according to Raimer — won’t receive them this year.
But Raimer said the contract negotiations with Aetna were unrelated to its larger fiscal problems. He noted the medical branch has been trying to renew its contract with the insurance provider as far back as 2010.
“We worked with all the people in the brokerage firms and handling insurance trying to get this resolved,” Raimer said. “There comes a time that you just have to move on and say we can’t reach an agreement on a deal.”
While he didn’t rule out Aetna coming back to the table at some point, Raimer said it would have to be under the terms of beginning “an entire new discussion.”
“We are secure in our decision to walk away,” he said.