Aetna, Coventry health plans say they’ll drop Mount Sinai Medical Center over prices

Two South Florida healthcare institutions are waging a public fight over the price of healthcare services and warning of a potential break up that could affect more than 100,000 Miami-Dade residents.

Aetna Health and Coventry Health Care of Florida, which provide health insurance coverage for workers in large companies and for people with Medicare and Medicaid, informed their members earlier this month that Mount Sinai Medical Center will be “leaving” their provider network.

According to Aetna’s letter, its members will lose in-network access to Mount Sinai beginning Nov. 7. Coventry, an affiliate of Aetna, will no longer include Mount Sinai in its network beginning Oct. 27. Aetna and Coventry members will be able to access Mount Sinai only on an out-of-network or emergency basis — which typically costs more.

The insurers declined to specify the reason for the split. Shelly Bendit, a spokeswoman for Aetna, said the insurer and Mount Sinai continue to negotiate. “Both parties are working together to reach a fair and reasonable agreement,” she said.

But Mount Sinai CEO Steven Sonenreich made no bones about the reason for the rift in a letter to customers dated Oct. 9. The disagreement is over reimbursement rates, or the amount an insurer is willing to pay a hospital or physician for services provided to the insurer’s members.

“Coventry and Aetna have provided no rate increase to Mount Sinai in more than five years and we are compensated significantly less than other providers in Miami-Dade for the same services,” Sonenreich said.

Health insurers and hospitals negotiate reimbursement rates behind closed doors, with insurance companies leveraging their membership numbers to get the lowest prices from the hospitals. Hospitals leverage their geographic dominance, medical excellence and customer satisfaction to negotiate the highest rates for their services.

Agreements are kept secret through non-disclosure agreements contained in the contracts. But Sonenreich is privy to what Aetna and Coventry pay other South Florida hospital systems for services because Mount Sinai covers its employees health insurance expenses through a self-insured plan.

So when a hospital system such as Baptist Health South Florida bills a Mount Sinai employee for care, Sonenreich said he has access to that information.

While most hospital prices are secret, Florida’s Agency for Health Care Administration reports that Mount Sinai had among the lowest average charges in Miami-Dade for inpatient, outpatient and emergency room care in 2017.

Mount Sinai reported average charges of $54,867 for inpatient care last year — less than the countywide average of $68,221 for the same category of care. For outpatient procedures, Mount Sinai’s average charge of $14,456 is almost identical to the countywide average of $14,425 but lower than most other hospitals in Miami-Dade. The hospital system’s average charges of $4,561 for emergency room care are below the Miami-Dade average of $6,379.

Sonenreich said he has heard from “many people,” including employers, who want to keep Mount Sinai and its doctors in their insurance plan.

“They’ll switch plans to an insurance plan that does include Mount Sinai,” he said.

Mount Sinai, once confined to its home base in Miami Beach, has spent the past five years extending its reach across Miami-Dade by building a network of stand-alone emergency rooms, doctors offices and clinics in neighborhoods far from the main hospital. Mount Sinai now has facilities in Aventura, Coral Gables, Hialeah, Key Biscayne, Miami Lakes, Miami Shores, Skylake and Sunny Isles — facilities that act as referral centers to the hospital’s main campus in Miami Beach.

The larger the hospital system and the greater its dominance of a geographic area, the more leverage that hospital system can exert to extract higher reimbursements from insurers, who then may pass those increases on to employers and consumers through higher premiums, higher deductibles and higher co-insurance rates.

Unlike most hospitals, which draw most of their patients from the immediate area where the facility is located, Mount Sinai draws 70 percent of its patients from outside of its home base in Miami Beach.

“We are a major referral center,” Sonenreich said.

But neither side holds all the cards in the negotiations. Aetna and Coventry are formidable health insurers with lines of business in group plans offered by large employers, Medicare and Medicaid.

Aetna covers 201,200 members statewide through group plans, individual plans and Medicare, according to the Florida Office of Insurance Regulation. Coventry covers 105,681 lives in group and Medicaid plans, including Florida Healthy Kids.

In Miami-Dade, Aetna has 50,592 members, primarily in group plans and in Medicare Advantage, according to state regulators. Coventry has 63,963 members in Miami-Dade, mostly in Medicaid managed care and Florida Healthy Kids, the state’s Medicaid plan for children.

Sometimes, hospitals and health insurers can take years to come to terms.

This month, Humana Medical Plan and its affiliate, CarePlus Health Plans, which cover nearly 500,000 Floridians in Medicare plans, announced that Baptist Health South Florida, the largest nonprofit hospital system in the region, was once again in network for the health insurers. The health insurers and hospital system had not done business together since 2014.

Follow Daniel Chang on Twitter @dchangmiami