Lawrence Memorial Hospital this month signed a three-year agreement to remain a managed-care provider accommodating customers of Coventry Health Care of Kansas Inc.
The agreement, signed Oct. 1, ensures that members of Coventry's managed-care programs will continue to be covered at LMH and its affiliated operations.
LMH's agreement comes as another regional hospital - North Kansas City Hospital and its affiliated clinics - opted to sever its relationship with Coventry, citing ongoing problems with delayed payments, contested billings and underpayment of claims.
The "gutsy move" from North Kansas City Hospital means that the regional provider will pass on about $18 million a year in annual revenue, said Gene Meyer, president and chief executive officer of Lawrence Memorial Hospital.
Such commercial accounts are valuable to hospitals because they typically pay higher reimbursement rates than government programs such as Medicare or Medicaid.
But North Kansas City Hospital apparently decided that enough was enough.
"In negotiations - whether it be hospitals with insurance companies or anything else - the key to negotiations is if you're willing to walk away," Meyer said. "This sends a message not only to Coventry but other managed-care companies that we'll be dealing with in the future."
LMH secured a satisfactory agreement with Coventry after more than a year of negotiations, Meyer said. The pact covers more than reimbursement rates for services.
Coventry has agreed to automate many of its billing and other procedures, Meyer said, which should reduce the hospital's administrative costs.
Processing claims should be faster and less subjective, he said: "It saves the system money and hopefully avoids some human error that can occur."
North Kansas City Hospital has maintained that Coventry represents 3 percent of its business and "99 percent" of its problems with billings.
At LMH, Meyer said, Coventry represents a larger share of business and certainly less than 99 percent of financial complications.
"I will say that we've had issues with many insurance companies, because of the complex nature of hospital reimbursement," Meyer said. "I don't know that Coventry is any worse than or any better than another."