11/21/13 — Hospital: Outlook improving

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Hospital: Outlook improving

By Matthew Whittle
Published in News on November 21, 2013 1:46 PM

Wayne Memorial Hospital officials say progress is being made toward a contract settlement with Blue Cross and Blue Shield of North Carolina, and that they are hopeful an agreement can be reached by Thanksgiving.

"We are in negotiations. We've been trading proposals," Wayne Memorial Chief Financial Officer Rebecca Craig said. "We are waiting on a response from Blue Cross in regard to our last proposal to them."

That proposal, Mrs. Craig said, was submitted on Nov. 13, and came on the heels of a second face-to-face meeting on Nov. 8.

The hospital's proposal, she said, would reduce the amount Blue Cross pays the hospital by more than $1 million from the current contract levels.

"And they want more than that," Mrs. Craig said. "How much do we have to give to get the contract renewed?"

The problem, she said, is that with a profit margin of just over 4 percent, once those millions start coming out of the budget, the effects will be felt across the facility since that money is what is used to replace equipment, to make repairs and to update systems.

"We'd like to get this done with the least negative impact to the hospital," Mrs. Craig said. "We've got to weigh, the board of directors has to weigh, the long-term impact for the hospital. We have offered to accept a cut in revenues. What we cannot do is allow Blue Cross to push us into a deal that could irreparably damage our hospital and community."

She explained that by giving up that $1 million, the hospital has already come off the terms of the current contract.

The primary issue between the WMH and BCBS is the way the insurance company's allowable rates for outpatient procedures are determined. Under the current contract, those are a fixed percentage, moving in proportion to the hospital board of directors' charge adjustments -- fee changes the board felt were "justified," Ms. Craig said.

Under the contract originally sought by Blue Cross, those allowable rates would be fixed over a certain period of time, regardless of how the hospital board of directors changed its base charges.

Now, Mrs. Craig said, Blue Cross is looking to fix those rates in years two and three of the contract, while the hospital would like to use what she described as a nationwide hospital cost of living measure, the Hospital and Related Services CPI from the federal Bureau of Labor Statistics, to adjust those rates in relation to annual increases in the costs of equipment and supplies.

"We can't go to our suppliers and demand what we're going to pay," Mrs. Craig said.

And, she noted, Blue Cross has more than $2 billion reserves -- 10 times what the N.C. Department of Insurance requires.

"Blue Cross should be able to accept our latest proposal without raising premiums to local employees one penny," she said.

In addition, she continued, the two sides have agreed to a blended rate structure -- a single percentage or method for determining allowable rates for both outpatient and inpatient procedures.

In the past, she explained, inpatient procedures were billed at much lower rates than outpatient, which had been a cause of concern.

"The difference between the two led to a lot of angst," she said. "I think we've ended up somewhere in the middle."

And so, she said, as the two sides have worked through the 47-page contract -- largely over email and through phone calls -- there have been some compromises and some progress made.

"I would say we're pleased, but we are truly interested in getting this behind us and putting all of our attention back on patient care," Mrs. Craig said. "We are very hopeful to get this done. We'd love to see this done by Thanksgiving, but if we have to push through Thanksgiving, we'll push through."

In the meantime, however, hospital officials are still preparing for the worst -- for the contract to be terminated on Dec. 5 if no agreement is reached by Dec. 4.

But to help mitigate the impact on county residents, she said the hospital has agreed to honor Blue Cross in-network discounts for patients through the end of December, regardless of what happens with the negotiations. That means, she explained, if patients insured by Blue Cross would normally pay 20 percent of the charge for a procedure done in network, but 40 percent if it's done out of network, the hospital will hold those patients harmless for that additional 20 percent through Dec. 31.

In response to a request for comment from Blue Cross spokesman Lew Borman simply confirmed that the two sides are "still talking."