With Miami Beach employees and retirees locked out of the region’s largest healthcare system — Baptist Health South Florida — city officials on Friday said they will consider switching to a new health plan administrator, even if it costs more.
Currently served by Humana, one of the largest health insurers in South Florida, an estimated 1,500 Miami Beach employees, retirees and their dependents enrolled in the city’s health plan essentially have become collateral damage in an on-going disagreement between Humana and Baptist Health.
The two healthcare giants parted ways in mid-August. And while neither Humana nor Baptist revealed the reason for the break up, hospital systems and health insurers primarily negotiate one thing: reimbursement rates, or the amount the insurer is willing to pay a hospital or physician for services provided to that insurer’s members.
But about 360 employees, retirees and their dependents who are enrolled in the health plan live in an area where Baptist Hospital Miami is the nearest healthcare facility, according to a memo from the city manager to Miami Beach’s finance committee.
The memo also notes that claims associated with Baptist hospitals, physicians and other providers represent between 9.9 and 17.7 percent of Miami Beach’s health plan spending between 2011 through June 2014.
As a self-insured entity, Miami Beach pays all claims incurred by the health plan. The city pays Humana an administrative fee of $39.48 per plan member to process those claims and to provide members access to the insurer’s provider network and the reimbursement discounts negotiated with each.
For the year ending Sept. 30, 2013, Miami Beach’s health insurance fund incurred about $16.5 million in claims, according to the city’s most recent annual financial report.
Using the city manager’s estimates, that means Miami Beach spent between $1.6 million and $2.9 million in 2013 for its members to use Baptist Health doctors and hospitals.
City commissioners meeting as the finance committee on Friday voted to contract with AvMed Health Plans as a second carrier because that insurer has a contract with Baptist Health. They also elected to re-open enrollment for employees for 2015, while inviting other insurers to bid to be the city’s new administrator for a health plan to begin in 2016.
Baptist Health and Humana are not currently negotiating, said Christine Kotler, a spokeswoman for Baptist Health.
Still, it is unclear whether Miami Beach can break its contract with Humana, which has been the city’s health plan administrator for nearly two decades.
Sylvia Crespo-Tabak, the city’s human resources director, told the finance committee that she would consult with the city attorney to ask “whether or not we have cause to walk away from it.” She also strongly urged the committee to choose AvMed.
“We have spoken to them off the record,’’ she said. “They are extremely interested in working with us.’’
Richard Shell, a benefits consultant for the city, said the switch might cause costs to rise.
“Worst-case scenario,’’ he said, “there would be a claims increase of a little over $200,000.”
The committee didn’t discuss how much the city might save by excluding Baptist Health, whose hospitals had among the highest average charges in Miami-Dade in 2013, according to state data at FloridaHealthFinder.gov.