CHI Memorial is warning local doctors that it has been unable to negotiate a new contract with UnitedHealthcare, and as of Nov. 1, the hospital will no longer be in the network covered by the health insurer.

CHI Memorial sent a letter Tuesday to local physicians affiliated with the hospital, telling them negotiations are at an impasse.

"We started negotiations with United weeks ago in order to give ourselves plenty of time to get a contract signed before the expiration date," CHI Memorial CEO Larry Schumacher said in the letter, "however, United has not put forward a reasonable offer."

UnitedHealthcare's offer results in an overall rate decrease, he said, "while maintaining a reimbursement methodology on key outpatient services that reimburses at levels below our cost to provide those services."

UnitedHealthcare also is unwilling to negotiate any increases for physicians affiliated with the hospital, Schumacher said.

UnitedHealthcare disputed those claims in a statement issued late Tuesday, saying CHI Memorial wants to raise rates unreasonably.

"CHI Memorial wants to raise the cost of care at its hospitals by double digits," the statement reads, "and their proposed rate increases would result in our members and local employers both paying more for their health care for the next several years. We have committed to a relationship with CHI that is based on paying for increased quality and promoting better health for the people we serve and hope they will share this focus."

UnitedHealthcare is the nation's largest health insurance company. A company spokesperson said about 5,100 UnitedHealthcare customers in the Chattanooga metro area, including both commercial and Medicare, would be affected if the contract is not renewed.

Schumacher warned doctors that if a contract with UnitedHealthcare cannot be reached by Oct. 31, patients with United Commercial and Medicare Advantage insurance would be forced to pay more out of pocket for their care at any of CHI Memorial's local facilities.

"All we are asking for is a rate adjustment that is in line with the market, and recognizes the value of Chattanooga's only 4-star health system as rated by Medicare Compare and the only hospital recognized as a Best Regional Hospital by US News & World Report," he said. "It's difficult to understand how United can justify reducing payments below cost to provide care when our hospital has been recognized within Catholic Health Initiatives as a high-quality, efficient, low cost health system."

UnitedHealthcare officials said they had offered to pay CHI Memorial competitive rates that are compatible with what other Tennessee hospitals are paid for the same services.

UnitedHealthcare has also sent out a letter to its customers, informing them that CHI Memorial may be dropped from their network. Company spokesperson Tracey Lempner said the letter is required under government regulations.

In the letter, UnitedHealthcare suggests its customers use two other area hospitals that are in its network—Erlanger and Parkridge, CHI Memorial's major competitors.

Contact staff writer Steve Johnson at 423-757-6673, sjohnson@timesfreepress.com, on Twitter @stevejohnsonTFP, and on Facebook, www.facebook.com/noogahealth.