Enrollment drop has United vowing to be nicer
■ Faced with waning commercial membership, UnitedHealth Group executives promise to improve its relationships with physicians and patients.
By Emily Berry — Posted Jan. 14, 2008
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Health plans often declare that they want to have good relationships with their physicians. But UnitedHealth Group has at least 315,000 reasons to make extra nice.
That number represents the 2007 slide that the insurer experienced in employer-sponsored and individual memberships. The company attributes the loss, in part, to frayed relations with patients and physicians. At a Dec. 4, 2007, investors' meeting in New York, United pledged that improvements were on the way.
Among United's promises: It will show doctors and patients the day of a doctor's visit how a claim will be paid; doctors will be paid more quickly; and United employees will be given incentives for quality and patient advocacy first, productivity second.
"We understand relationships, and we recognize that this is a health system that needs to work for everyone, not just for us," United Executive Vice President David Wichmann, who oversees individual and employer group markets, told the investors.
The company placed much of the blame for its service problems on the difficulty of integrating its health plan acquisitions. In particular, United said it had mishandled the transition of PacifiCare, acquired for $8.8 billion in 2005.
"We pursued too much change too fast, and the results were too disruptive," Wichmann said.
Lately, United has made many promises to behave better, from a 36-state settlement regarding its conduct toward physicians to an apology from CEO Stephen Hemsley for a stock-options backdating scandal. But doctors said their problems with United are long-running. They are skeptical that the situation will get better just because the company says it will.
"We would love to see them change, but we're not going to hold our breath," said AMA Immediate Past President William G. Plested, MD. "They have all this mea culpa, then nothing happens -- they go right on the way they are."
The membership loss might be the difference this time, said Kevin Bang, vice president at Master Consulting Group, a Warrensville Heights, Ohio-based insurance brokerage and consulting firm. "When you start to lose business, it's like, 'OK, what are the changes -- surface, core, painful and not painful -- that have to be made?' "
Still, Minnesota-based United does not have to worry about its membership eroding to nothing anytime soon. The 315,000 lost members represent only a little more than 1% of United's commercial membership of 25.5 million. Meanwhile, about 550,000 doctors are part of United's network, and that number grew last year by 57,000, spokesman Tyler Mason said.
But United is trying to repair what it sees as a broken image.
Part of the image hit has come with civil, regulatory and criminal investigations into how it awarded stock options to top executives. Chair and CEO William McGuire, MD, stepped down in 2006 after allegations that he and others had received stock options that, rather than carrying a specific exercise date, were dated after the fact to match the lowest price of the firm's stock over the previous 52 weeks.
Dr. McGuire has denied all wrongdoing. But he has given up more than $600 million in stock options to settle civil disputes (a move that also closed a Securities and Exchange Commission investigation). He has another $800 million in options frozen while Minnesota state regulatory and criminal inquiries continue. Hemsley, who has given back more than $200 million in stock options, has apologized on behalf of the company for the "embarrassing" stock-options problems.
Physicians not yet convinced
That apology was aimed at Wall Street -- and given the rebound in United's stock price, it was accepted. Doctors are going to be a tougher sell, said Sandy Lane, a consultant to medical practices with Lutz & Co. in Omaha, Neb. "Of all the different payers, [United] is clearly the one everyone has the most problems with," she said. "The reputation from a reimbursement standpoint is they are the lowest payers. There's absolutely no working with them."
United recently has spent time with state regulators, pledging to be do better by physicians. In August 2007, the company, without admitting any guilt, agreed to a $12 million settlement with 36 states and the District of Columbia. It promised to improve its claims payment procedures and physician communication, to settle a three-year investigation into United's payment practices. In November 2007, United was among the health plans that pledged to honor nationwide a deal struck with New York Attorney General Andrew Cuomo to use independent, reliable quality data in setting up tiered physician networks.
"Because we value our relationships with physicians, we are committed to listening, learning and modifying the manner [in] which we effect change in our organization in order to work together to enhance access to health care," Mason said.
The customer service initiatives, as well as promotion of new products and services in more markets, should result in United adding back 250,000 commercial members by the end of 2008, Mason said.
California Medical Assn. President Richard Frankenstein, MD, a pulmonologist, said United's success in improving its reputation will depend on more than promises. The CMA met with United in early December 2007.
"I hope it means this is the beginning of a new era and they will devote whatever resources [necessary] in a rapid time frame to get things running smoothly," he said.
Bang, the consultant, said the major publicly traded health plans have to show Wall Street profits and growth, and that has kept them from investing in a high-quality customer service work force.
"Many insurance companies have lost touch with the end user, vendor or partner -- that being the physicians, the customers and the brokers," he said. "I am certainly encouraged to hear they're acknowledging some of these things, but I, like the physicians, am eager to see what happens when the rubber meets the road."