Priority And Physicians Settle Deal

October 18, 2004
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MUSKEGON — Priority Health and Mercy General Health Partners and its physician group have a new participating agreement that avoids a disruption in the local care network.

The two sides finalized a new deal earlier this month for Priority Health’s self-funded health plans that cover at least 2,000 people at employers in MuskegonCounty and northern OttawaCounty. The deal came after it appeared they would part ways after they were unable to reach a new participating agreement in 18 months of negotiations.

The deal keeps Mercy General Health Partners and Westshore Health Network, which consist of about 180 physicians in the Muskegon-area market, in Priority Health’s care network for self-funded health plans, albeit at different financial terms that neither side will disclose.

“We generally felt not completely satisfied with the terms but it was important to maintain access and choice for the community,” Mercy General Health Partners Chief Financial Office Mary Boyd said. “We really listened to the employers and felt it was time to make the shift.”

The new participating agreement covers Priority Health’s preferred-provider organization (PPO), point-of-service (POS) and administrative services only (ASO) health plans.

In opening up the participating agreement 18 months ago, Priority Health argued it paid Mercy General and Westshore Health Network too much compared to other care providers in the market and offered new reimbursement terms.

Seeing those proposed reimbursement rates as too low and an effort to gain market share in the Muskegon area at the health system’s expense, Mercy General and Westshore Health Network would not sign the contract offer. The lack of a deal led both sides to begin preparing for Mercy General and Westshore Health Network to pull out of Priority Health’s care network for self-funded health plans as of Sept. 10.

Priority Health subsequently offered to extend the existing participating agreement to Oct. 31 as the two sides continued negotiations, which led to the new deal.

The agreement narrowed disparities between Priority Health’s reimbursement payments to Mercy General and Westshore Health Network, compared to what other care providers in the market receive, said Rob Pocock, the managed-care company’s associate vice president for corporate communications.

“It brings them in line with the other hospitals in the region and it keeps them in the network, which was our goal all along,” Pocock said.    

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