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Virginia’s largest insurer wants investigation of Sentara for ‘anti-competitve harm’

The move comes after the health system threatened to cut off some Medicaid patients from its facilities
Sentara Heart Hospital in Norfolk.
Sentara Heart Hospital in Norfolk.(Ned Oliver/Virginia Mercury)
Published: Oct. 25, 2021 at 9:33 AM EDT
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In early April, Sentara — one of the largest health systems in Virginia with 11 hospitals scattered across five regions — sent a letter to Anthem, the state’s largest insurer.

Lance Torcom, Sentara’s chief managed care officer, informed Anthem that the system would be terminating its contract with the insurer’s Medicaid and Medicare lines of business. Effective Oct. 12, in other words, any patient who received government-provided health coverage through Anthem would no longer be able to use their insurance at Sentara’s facilities. These include not only the system’s acute care hospitals but seven affiliated surgery centers and six physician groups that also fall under its ownership.

“Please understand that it has always been our preference to avoid such action,” Torcom wrote to Andy Randazzo, a regional vice president for Anthem. “In fact, we purposefully provided Anthem with advance verbal and written notice of this potential action in February in an attempt to resolve the matter and avoid escalation.”

The move, which could have affected more than 525,000 of Anthem’s Medicaid patients across Virginia, according to state enrollment figures, never happened. After weeks of negotiation, Sentara rescinded its termination notice on Aug. 16. Anthem’s Medicaid and Medicare patients were never notified about the dispute or told their insurance would no longer be accepted at Sentara facilities, according to Christina Nuckols, a spokesperson for the Virginia Department of Medical Assistance Services, which administers the state’s Medicaid program.

“Health care access and services for our members continued without disruption,” she wrote in an email. But not before Anthem escalated the fight to state regulators. In May, the company sent a letter to Attorney General Mark Herring, asking his office to look into the “anti-competitive harm” posed by Sentara. Even after the hospital system withdrew its termination, Anthem prodded for an inquiry.

“We continue to encourage the Office of the Attorney General to investigate the anticompetitive behavior of Sentara to leverage their monopoly status in their efforts to limit payor competition,” Lindsay Berry Winter, the insurer’s senior director of government relations, wrote in a later email to state officials (the Mercury obtained the documents through a Freedom of Information Act request).

“While we are thankful that our members were not denied access to the monopoly hospital in the region, we do not think Medicaid and Medicare beneficiaries should be used as pawns by hospitals in contract negotiations,” she added. “Especially those hospitals who have ownership stakes in competitor health plans.”

The conflict speaks to Sentara’s growing market dominance — largely left unchallenged by state regulators — but also a new era of scrutiny into large health systems. Earlier this summer, President Joe Biden cited hospital monopolization as a specific area of concern to competition, signing an executive order that directed federal regulators to focus their enforcement efforts on health care markets. Numerous states, including California and North Carolina, have seen officials crackdown on sprawling hospital systems for stifling competition in their regions.

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.(Virginia Mercury)

The Virginia Mercury is a new, nonpartisan, nonprofit news organization covering Virginia government and policy.

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