Insurance & Benefits

Cigna Contract with Southwestern Health Resources Could End Jan. 1

The new year may mark the end of a relationship between two of the largest players in the local healthcare industry, as Southwestern Health Resources and Cigna have been unable to agree to a new contract, meaning SWHR will be out of of network for Cigna members on January 1.

The conflict centers upon the connection between cost and quality, and how each organization measures them. The conflict could impact hundreds of thousands of people across the region. Over the past 18 months, there have been 136,000 interactions between Cigna members and SWHR, 66,000 of those interactions were at SWHR facilities and about 70,000 were with SWHR affiliated physicians. Southwestern Health Resources, the partnership between UT Southwestern and Texas Health Resources, includes dozens of hospitals and hundreds of care sites across North Texas.

Negotiated rates between hospitals and insurance companies are a fiercely guarded secret, despite recent Health and Human Services attempts to improve transparency for consumers. But according to Lamonte Thomas, General Manager of Cigna for North Texas and Oklahoma, SWHR is demanding rate increases that are 30 percent more than comparable health systems in the region. The sticking point seems to be how quality is measured.

Thomas says that SWHR does demonstrate expertise and quality, but “other systems are achieving quality measures, removing waste, improving outcomes, improving quality, and their cost of care has gone down.”

Around 90 percent of Cigna’s business is through self-funded employers, meaning the clients are the ones to pay the healthcare costs, not necessarily Cigna. Thomas says he is negotiating on behalf of those employers who want to get value from their healthcare spend. “When I have an alternative, with a lower price and yielding better results, why pay more for systems that aren’t equal?” he says.

Dr. Andrew Ziskind, Senior Executive Officer of SWHR, says that their good-faith efforts have resulted in an impasse. “The heart of this issue is the need to focus on quality and total cost of care and not simply the unit cost of each service. More complex health issues require more highly skilled resources and better coordination of care,” he said via statement.

He called Cigna’s approach to looking at cost “outdated” and says SWHR focuses intensely on reducing costs and improving quality. He also noted that SWHR effectively cares for a more complex patient population, and says “our patients have seen lower costs over the last four years than patients who use other networks.”

Unit cost of service and total cost of care are concepts that find themselves in the center of a long lurch of the healthcare system away from fee-for-service and toward value-based care or bundled care, where the total cost of an episode of care is taken into account, rather than the costs of individual pieces of treatment. The thinking is that bundling care will avoid unnecessary treatment that may result when providers can bill for each individual piece of the treatment. Ziskind even called North Texas the “wild west” when it came to healthcare prices at a conference earlier this month, but says SWHR is part of the solution. “We’re proud to be the driving force of this high-quality, affordable care model for all North Texans,” Ziskind wrote. “That’s why we are deeply disappointed by Cigna’s recent misrepresentations.”

Thomas also noted the impact of the continued consolidation of physicians in North Texas, which adds leverage to health networks’ ability to enact higher rates. Texas Health Physicians Group has seen impressive growth in North Texas in the last few years, and as past president of the Dallas County Medical Society Dr. Rick Snyder once told D CEO Healthcare, “There are physician providers, hospital providers, and insurance companies. It’s a health truism that when any two of those align, they dominate the third.”

Cigna is working to battle against that consolidation. “We are trying to stop that expansion and reduce consolidation,” Thomas says. “Unless there is alignment in other places, is this a clinical alignment or just a land grab?”

Cigna has reached out to members to let them know that SWHR may no longer be in network, disrupting thousands of North Texans healthcare provider relationships. Cigna has offered to help members find in-network alternatives, and has extended in-network benefits for certain medical and behavioral health treatment for a specific time period.

This isn’t the first time in recent years that Texas Health Resources has found itself in a conflict with one of the large insurers in town. THR and Richardson-based Blue Cross Blue Shield of Texas have signed eleventh hour deals twice since 2016 after threats were made about an end to their in-network agreement.

For those involved in long-term care, a Texas Health spokesperson clarified that some patients as well as women who are pregnant who have an established physician relationship may qualify for continuity-of-care benefits that extend in-network access to SWHR, even if a deal can’t be reached. SWHR representatives will be in hospitals on Dec. 31 to help patients apply for these benefits, and the organization recommends that Cigna members call their insurance provider to begin to establish these continuity-of-care benefits as soon as possible.

But even with all the conflict, both sides remain positive that a solution will be reached. “North Texas continues to be one of the highest healthcare costs in the country, but I remain encouraged and we will continue to keep working to getting to something that has a better outcome for employers and individuals and consumers in North Texas,” Thomas says.

“We remain optimistic that they will work with us on an agreement that is in the best interest of employers, physicians and, most importantly, patients,” Ziskind wrote.

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