UNC Health Publicly Threatens to Cancel UnitedHealthcare Contracts

In warning letters this week to 200,000 patients and 40,000 providers, University of North Carolina (UNC) Health accused insurance giant UnitedHealthcare of “not negotiating with us in good faith” and said it’s on track to leave the insurer’s commercial and Medicare Advantage (MA) plan networks on April 1, 2024, if an agreement isn’t reached.

In the October 11 letter to providers, UNC Health’s chief clinical officer Matthew G. Ewend, MD, wrote, “We must hold payors, including UnitedHealthcare, accountable for adequate reimbursement and voice our concerns when administrative burdens like improper denials and preauthorization barriers get in the way of care. UNC Health is urging UnitedHealthcare to mirror our own commitment, prioritizing patient welfare.”

In the October 9 letter to patients, Ewend, who also is president of UNC Physicians, mentioned labor and other cost increases affecting the delivery of quality care and added, “UnitedHealthcare improperly denies claims and causes unnecessary delays in patient care. This can negatively affect your well-being.”

The university system’s letters specified that Medicaid contracts are not affected.

Even though the contracts would not expire for 24 weeks, Ewend told the UnitedHealthcare enrollees that he wanted to give them this information now, “so you can consider other plans that offer in-network access to UNC Health during this year’s open enrollment season.”

In a special webpage designed for the controversy, UNC noted that UnitedHealthcare “has had double-digit increases in their revenue, billions more than they expected. To continue to fulfill our mission, UNC Health needs a fair and equitable partnership with all payors, including UnitedHealthcare.”

In addition to leaving UnitedHealthcare’s networks, Ewend said the university also plans to end UnitedHealthcare’s contract to administer UNC’s self-insured health plan because of many complaints from UNC teammates about their challenges working with UnitedHealthcare. Blue Cross and Blue Shield of North Carolina will be the new administrator.

John Buse, MD, director of the UNC Diabetes Care Center, who is not involved in the contracts, said that UnitedHealthcare’s “values expressed through negotiations do not align with ours and we are encouraging our patients to change their insurer instead of their provider during open enrollment.”

Asked what impact that might have next year on the university, Buse said he thought it would be modest, “as we have so many patients trying to come to see us … Unfortunately, it may be a huge problem for our patients who do not recognize their opportunity to switch coverage. We need a single-payer healthcare system! The incentives are all wrong.”

Patients affected by UNC’s possible exit from UnitedHealthcare would still have several other options to choose from, according to Alan Wolf, UNC’s media relations director; commercial plan patients’ other choices include Aetna, Cigna, and BlueCross BlueShield, while MA patients could pick MA plans from Aetna, Cigna, BlueCross BlueShield, Humana, and others.

Asked for a response, UnitedHealthcare called the letters “a tactic designed to [give UNC more leverage] by creating unnecessary fear and stress. Our contract remains in effect through March 31, 2024.

“We are early on in our discussions and are committed to utilizing the nearly 6 months remaining on our contract to engage in continued good-faith negotiation with the goal of reaching a long-term agreement that is affordable and sustainable for North Carolina families and employers,” the insurer said.

The letters may well be a negotiating tactic. But asked if the health system has ever sent letters like these before during contract negotiations, Wolf said that it hadn’t done so in more than 10 years. And that time, it severed agreements with Aetna.

UNC’s threat follows what many think is the start of a national trend of health systems cancelling contracts with insurers who they think don’t play fair. Two weeks ago, two large and prestigious Scripps Health medical groups in San Diego announced they were not extending contracts in 2024 with nearly all of of their MA plans, leaving 32,000 patients with a choice of leaving their doctors to search for one in another medical group that still accepts MA plans, or enrolling in traditional Medicare in hopes of being healthy enough to qualify for a supplemental plan.

Several other organizations in recent months have also announced an end to their MA contracts, citing similar reasons. It is unknown how many health systems plan to cancel their UnitedHealthcare commercial contracts for employer-sponsored plans.