Long Island's most widely-used managed-care company may no longer be covered by Winthrop-University Hospital and its associate South Nassau Hospital for elective procedures if a dispute over cost-cutting methods isn't resolved by March.

Winthrop-South Nassau University Health System filed a notice of intent with Aetna U.S. Heathcare on Sept. 20, saying the hospitals will terminate their contract with the HMO if it doesn't renegotiate its system of payment reimbursement.

"Our industry just isn't happy with HMOs in general because of the bureaucracy we have to go through to deal with patients," said Carmine Asparro, senior vice president for managed care for the Winthrop-South Nassau health system. "With Aetna, they were denying payment the day after care was delivered and there are expressed provisions in the contract prohibiting that."

The hospitals contend Aetna was also late in reimbursing payments for other approved elective procedures. If Aetna is dropped by the hospitals in March, it could force tens of thousands of Long Island patients to have to either change insurance providers or choose another hospital for elective procedures. Hospitals are legally bound to accept patients for emergency procedures.

However, both sides indicate the problem won't get that far. While Aetna has reserved comment on the specifics of the dispute, it has offered hope it can be resolved, and Asparro said talks with the HMO have been productive.

That was precisely the point of filing the grievance, said John Broder, vice president for external affairs at Winthrop.

"Aetna was put on notice of the intent to terminate our contract if some positive outcomes did not come out of the six-month negotiations," Broder said. "Patients are not going to be waiting for care. We used a clause in our contract which allows us some leverage in enacting a change."

The hospitals claim Aetna was in breach of contract by delaying payments to the hospitals and retroactively denying some claims it had previously approved. This practice is used by other HMOs as a cost-cutting method, but Asparro said Aetna is the primary culprit.

"These are issues of degree," he said. "It seems Aetna is more aggressive than other HMOs. The HMOs put in front of us and patients a bureaucratic process that must be done before they approve care. They've put in place mechanisms where we have to notify them when a patient is moved from unit to unit within the hospital. We had cases where we would notify them via voice mail and they would come back and deny that we gave them notice and deny someone care in the ICU. That's the type of practice we've been faced with over the past year."

In addition to delaying payments and reversing decisions on payment, the rate of reimbursements is also at issue. Hospitals in suburbs like Long Island are generally paid lower reimbursement rates than their counterparts in cities. As a result of this, Robert Woods Johnson University Hospital in central New Jersey recently declined to renew its contract with Aetna.

In contrast to the increasing burdens placed on health care providers by most insurance companies, one HMO, United Health Care, has recently announced it is overhauling many of its bureaucratic practices to relieve the cost of red tape, ultimately in favor of more physician control.

"United Health Care has just decided that it may not make sense for them to invest in all these bureaucratic practices when the dividends are so minimal," Asparro said. "They're saying, 'Let's put decisions back in the hands of doctors.' We believe it's a push in the right direction."

However, United Health Care's approach is still not the norm, and HMOs are still viewed favorably by businesses.

"At least of today, the business community believes HMOs have had a positive impact in decreasing health care costs," Asparro said. "But we do see Congress and the general citizenry being concerned about the process."