UAB Health System Faces Contract Disputes with UnitedHealthcare

News Summary

The University of Alabama at Birmingham (UAB) health system is in a contract dispute with UnitedHealthcare, potentially affecting 500,000 patients by the July 31 deadline. The negotiations have become contentious, with UAB citing high claim denials and delayed payments, while UnitedHealthcare claims UAB demands excessive price increases. The dispute could significantly impact patient care across Alabama, as both UAB and UnitedHealthcare work to address the situation amidst broader trends of reimbursement issues faced by hospitals nationwide.

Birmingham, Alabama – The University of Alabama at Birmingham (UAB) health system is currently embroiled in contract disputes with UnitedHealthcare, the nation’s largest insurance provider. Should the negotiations fail by the deadline of July 31, approximately 500,000 UnitedHealthcare patients could lose their in-network access to UAB, which is considered the largest hospital in Alabama.

This impending contract termination would encompass all UAB clinics and services, impacting not only UAB hospital but also St. Vincent’s facilities and UAB-employed physicians at Children’s of Alabama hospital. With UAB serving around 1.4 million patients across the state, the fallout could create significant barriers to care for patients who rely on UnitedHealthcare for their insurance coverage.

As the situation stands, UnitedHealthcare patients at UAB would face the burden of personal responsibility for any incurred costs should an agreement not be reached by the looming deadline. Affected services span both commercial and Medicare Advantage plans under United, although patients enrolled in the United PEEHIP plan may still find limited coverage options remaining.

Negotiations between UAB and UnitedHealthcare have revolved around crucial issues including the high rates of claim denials and delayed payments reported by UAB. Administrative challenges within the UnitedHealthcare system have been cited as major hindrances during discussions. In contrast, UnitedHealthcare has characterized UAB as already possessing elevated costs and has accused the institution of demanding a double-digit price increase for its commercial plans within a single year. They argue that UAB’s monetary demands would position it among the costliest providers in their national Medicare Advantage network.

In response to the contract disputes, UnitedHealthcare offered a 60-day extension to maintain in-network services, a proposal that was ultimately rejected by UAB. UAB claims that discussions regarding the contract initiated almost a year ago were not given proper attention by UnitedHealthcare until approximately 45 days before the notification deadline to its members regarding the potential lapse of in-network access.

Furthermore, UAB Health System CEO Dawn Bulgarella noted the organization’s dedication to negotiating with UnitedHealthcare in good faith, with hopes of arriving at a reasonable resolution. UAB has also pointed out that, despite the financial pressures, it continues to provide over $100 million annually in uncompensated care, a cost burden exacerbated by the lack of Medicaid expansion in Alabama.

As Alabama’s largest health system, UAB plays a critical role in offering care to some of the state’s most vulnerable and medically challenged populations. The current dispute with UnitedHealthcare is part of a wider trend observed nationally, where hospitals are increasingly facing low reimbursement rates and escalating claim denial rates from UnitedHealthcare. Other regional hospitals, such as Huntsville Hospital Health System and North Mississippi Health Services, have experienced similar contract conflicts with UnitedHealthcare.

Both UAB and UnitedHealthcare have initiated separate websites to provide detailed information about their positions on the ongoing contract disputes to concerned stakeholders. For their part, UnitedHealthcare reported earnings of $14.4 billion for the year 2024, along with a profit exceeding $6 billion for the first quarter of 2025, further intensifying the implications of the financial arguments being made by both parties in the ongoing negotiations.

As the conflict progresses, UAB is actively encouraging its patients to contact UnitedHealthcare to express the importance of maintaining in-network access to the UAB Health System’s services, underscoring the potential impact of the negotiations on patient care across Alabama.