11/23/13 — Blue Cross and Blue Shield makes 'final offer'

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Blue Cross and Blue Shield makes 'final offer'

By Matthew Whittle
Published in News on November 23, 2013 10:53 PM

Blue Cross and Blue Shield of North Carolina officials announced Friday afternoon that they have given Wayne Memorial Hospital their "final offer."

"We delivered to them yesterday (Thursday) our final offer," BCBS spokeswoman Michelle Douglas said. "It is a good offer, a fair offer and it is our final offer.

"This will be an offer they will need to choose to accept by Dec. 2 if they are to remain in our network."

However, Wayne Memorial Hospital officials disagree with the characterization of the offer as either good or fair.

"We are not happy with their best and final offer. Blue Cross should not expect Wayne Memorial Hospital to risk its viability as a quality hospital in order to improve its own financial position," Chief Financial Officer Becky Craig said. "We are going to continue to negotiate. We hope they will respond and keep the lines open, but they have indicated they are done."

As it has since negotiations began more than 18 months ago, the differences between the two sides come down to a single issue -- money. Specifically, the primary issue separating Wayne Memorial and Blue Cross is the allowable rates that Blue Cross will pay for procedures.

Under the current contract, those rates for outpatient procedures -- the original sticking point -- were set at a fixed percentage and rose or fell based on changes to the charge structure by the hospital board of directors.

Under the contract proposed 18 months ago by Blue Cross, those rates would be fixed for a certain period of time, regardless of how the hospital changed its charge structure.

In its latest offer to Blue Cross, Mrs. Craig said that the hospital had agreed to a revenue reduction of $1 million a year for three years through the implementation of a blended rate structure -- a single percentage or method for determining allowable rates for both outpatient and inpatient procedures.

However, she said, Blue Cross is seeking a total revenue reduction of $9 million over three years -- three times the amount the hospital had proposed. And, she noted, that's assuming that health care inflation remains at 5 percent.

"If inflation is less, then we're less apart. But if inflation is more, we'll be more apart," Mrs. Craig said.

According to the federal Bureau of Labor Statistics' Hospital and Related Services Consumer Price Index, to which the hospital had hoped to at least partially tie changes in the allowable rate, the average inflation rate between 2008 and 2012 was 6.2 percent.

"We don't think we should be penalized for increases in drug and supply costs beyond our control," Mrs. Craig said.

But the worst part, she said, was that Thursday's proposal was the same one Blue Cross had put on the table two weeks ago.

"I was hopeful. I really thought they were considering our offer. And then to get this, it was a surprise to all of us. It felt like they sort of pulled the rug out from under us," Mrs. Craig said. "We remain hopeful. They are the largest insurance company in our state and they have a lot of financial backing and a lot of resolve, but we're hopeful that as a rural community hospital, a safety net provider -- what some would call an essential hospital under the Affordable Care Act -- that we would be back at the table with Blue Cross before this all falls apart.

"We feel they have a responsibility to all of their covered members in Wayne County, and despite Blue Cross' abrupt end to negotiations, we are responding with another proposal with even more concessions on our part in an effort to keep negotiations active and push to a resolution. We are sincere. We do want a contract with Blue Cross. This is not the outcome we wanted."

However, it is unclear if Blue Cross will listen to any more proposals. While Ms. Douglas would not say there would absolutely not be any more negotiations, she did say that Blue Cross is adamant that this is its best offer.

"It is now in Wayne Memorial's court to choose to be in network or walk away," she said. "These are financial terms that we believe are fair to Wayne Memorial and help control the rising costs of health care in Wayne County.

"Our customers are paying entirely too much for care at the hospital and it needs to stop. We will not compromise on that."

Ms. Douglas also explained that Blue Cross has given the hospital until Dec. 2 to agree to the deal, despite Dec. 4 being the actual deadline to have the contract signed. If it is not, Blue Cross will terminate the contract on Dec. 5.

"We're seeking a resolution by Dec. 2 in order to ensure there is no disruption. We can't wait until the last minute," she said.

If Blue Cross does terminate the contract, all non-emergency procedures at Wayne Memorial will be considered out-of-network, unless there has been a continuity of care agreement put in place between the patient and Blue Cross.

However, Wayne Memorial officials have said they will continue to treat Blue Cross patients at in-patient rates through the end of December.