A physician-hospital organization representing 45 rural and community hospitals across Texas said it will end its contracts with UnitedHealthcare Insurance Company, starting at the end of the year.
The Texas Organization of Rural and Community Hospital’s Clinically Integrated Network, or TORCH CIN, said the termination represents “one of the most significant statements of rural provider frustration in recent Texas healthcare history.” The organization said UnitedHealthcare’s reimbursement rates are unsustainable and threaten the financial survival of rural health systems.
Paul Aslin, executive director of TORCH CIN, said his organization has been negotiating with UnitedHealthcare “in good faith” for more than 550 days – but despite biweekly meetings, TORCH CIN has not received a formal response to a proposal shared in January.
“We would like them to acknowledge that they do underpay us compared to people that have more leverage, especially, for example, the urban hospitals,” he said. “We would like for them to give us a proposal that is sustainable for our hospitals.”
UnitedHealthcare said it couldn’t publicly comment by the time of publication but pointed to recent prior authorization reforms as part of its effort to support rural hospitals and providers across the country. KERA will update with any additional response.
Aslin said the decision to terminate its contracts was difficult because UnitedHealthcare helped start TORCH CIN and was a good partner for a while – but that fell apart with negotiations.
“The hope was that they would treat us fairly and work with us but just dragging their feet and not getting it done in a timely way, in a fair way, we had no other choice,” he said. “The rates that we’re asking for are not unreasonable. We’re not asking for higher than or even relatively close to what they are currently paying other hospitals for the same services.”
TORCH CIN referred to data from Texas A&M Health Rural & Community Health Institute and Turquoise Health that showed rural hospitals are paid up to 53% less than hospitals in metropolitan areas for emergency departments visits under commercial contracts and up to 44% less for labor and delivery services.
Aslin said rural hospitals are at a higher risk of closure – mostly because of low or “unfair” reimbursement rates.
“We’ve been getting the same underpayments, in some cases, 10 plus years, while hospitals have to increase their costs because we have labor and clinicians that we pay,” he said.
More than half of Texas’ 154 rural inpatient hospitals are at risk of closing, according to the Center for Healthcare Quality and Payment Reform. The same report shows almost 70% of those hospitals have lost some of the services they are able to provide.
TORCH CIN facilities serve over 300,000 Texans across 45 hospitals, according to Aslin. Terminating the contract could put access to care at risk.
“It’s not a good situation for the people that we serve,” Aslin said. “Our hope is that we can solve this with United, but if not, then those folks are going to be looking for a different alternative to who they use for their insurance.”
TORCH CIN said there is still time before the contracts would end. Network agreements for private or employer-sponsored health plans would be terminated June 2027 and agreements for Medicaid-based health plans would be terminated at the end of this year.
“If they’re willing to, in good faith, come back to the table…we’re willing to negotiate,” Aslin said. “However, under the current circumstances we can’t continue because we really are trying to look out for our rural hospitals.”
Aslin also said insurance companies have a significant responsibility when it comes to rural communities having access to care.
“If they don’t pay our hospitals a sustainable rate, our hospitals will close and those patients will be without access to local health care and that’s not what we want,” he said. “We couldn’t stay under our current agreements and have all of our hospitals be sustainable, so the only alternative is to get paid a fair rate so that we can keep our doors open.”
Abigail Ruhman is KERA’s health reporter. Got a tip? Email Abigail at aruhman@kera.org.
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