Several thousand people in Lincoln recently were mailed warnings that a contract dispute could force them to change doctors and hospitals, or to pay a larger share of their health care bills.

The contract ends Aug. 31 and affects people with both private insurance and Medicaid.

Confusing things more, 1,500 to 2,000 patients received the letters by mistake.

This week, patients of Complete Children’s Health should get a new letter from United Healthcare of the Midlands telling them to ignore the first.

With about two weeks remaining in United’s contract with Saint Elizabeth Regional Medical Center and about 100 doctors affiliated with the hospital, people are antsy.

“Patients are confused and concerned,” said Joan Anderson, director of the Medicaid Enrollment Center in Lincoln. A number of Medicaid patients have called, uncertain whether they should wait to see whether an agreement is reached or choose a different insurer.

It may be a bigger issue for people with private health insurance, said Kevin Flores, Saint Elizabeth director of managed care.

Medicaid patients can change insurers with relative ease — it may take a month — but those with private insurance may be limited by their employer’s plan.

“If the (contract) termination goes through,” Flores said, “this is just going to be a mess for everybody.”

Flores and United spokesman Greg Thompson said they continue negotiating in the hope of reaching new terms. Thompson said the dispute involved medical reimbursement rates and similar issues.

Last year, United ended an Omaha showdown with the University of Nebraska Medical Center and its affiliated physicians in late November on contracts set to expire at the end of December.

Flores said time was running out to solve Lincoln’s dispute. Some time would be needed to alert patients by mail, he said.

“I can’t give a guarantee one way or another,” Flores said.

Letters recently sent by Saint Elizabeth’s Jeannette Wojtalweicz, vice president of finance, said negotiations had been fruitless and indicated a settlement was “unlikely.”

It stated: “This means that beginning August 31, 2008, Saint Elizabeth Regional Medical Center will no longer be a participating healthcare provider in United Healthcare plans. If you decide to stay with United Healthcare and Saint Elizabeth does not have a contract, your healthcare services will be paid for on an out-of-network basis … (and) you may be required to pay higher out-of-pocket expenses.”

United’s Thompson said state regulations required the notifications when less than a month remained in the contract and no settlement had been reached.

Saint Elizabeth notified United in February that it intended to withdraw from the current agreement.

Flores said contract termination could affect thousands in Lincoln.

Vivianne Chaumont, director of long-term services at the state Department of Health and Human Services, said the Medicaid patients of Saint Elizabeth or its affiliates would have the option of staying with United’s plan but using a different hospital and physician, or of switching to the Medicaid managed care plan of Blue Cross and Blue Shield of Nebraska.

Chaumont said she hoped the sides could reach new terms.

“We like it when clients have as much choice as possible,” she said.

The state Health Department said 32,721 Nebraskans were enrolled in Medicaid through United, including 3,541 in Lancaster County. As of August, 810 Medicaid patients would be immediately affected by the contract termination.

Swept up in the chaos were the dozen doctors, four physician assistants and an advanced practice nurse of Complete Children’s Health, said Dori Rodríguez, the group’s office manager.

“We’re sure we’re going to lose patients because of this,” she said Wednesday.

The group takes care of between 1,500 and 2,000 patients covered by a different United Healthcare contract.

The group was alerted that United had mistakenly sent letters to its patients when calls began to flood the office Aug. 4. The letters even named the group’s doctors, Rodriguez said.

“We had people crying on the phone,” she said.

The office’s billing staff spent the majority of a day answering calls, but it’s the ones who didn’t call and changed doctors that concern her.

When United was made aware of the problem, she said, it initially said it would correct the mistake the following day, but the correction letters did not go out until this week.

“We’re disappointed it took that long to correct it,” she said. “It should not take a week to correct an error that is that damaging.”

Reach Mark Andersen at 473-7238 or mandersen@journalstar.com.