02/02/14 — BCBS, hospital say no deal yet

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BCBS, hospital say no deal yet

By Matthew Whittle
Published in News on February 2, 2014 1:50 AM

News-Argus file photo

Wayne Memorial Hospital officials say they are still hoping to resolve a contractual dispute with Blue Cross and Blue Shield of North Carolina.

Nearly two months after Blue Cross and Blue Shield of North Carolina terminated its contract with Wayne Memorial Hospital, little has changed.

The two sides have continued discussions, but no agreement has been reached, and because of a pledge by WMH officials to temporarily treat BCBS patients as if they are in network, no out-of-network rates have been applied.

Furthermore, WMH CEO Bill Paugh said, it's still too early to really even tell whether local patients have begun to transfer their hospital care elsewhere.

But the longer this contract situation goes unresolved, the greater the likelihood of adverse financial impacts, Paugh said.

"There will be a financial impact," he said. "It's early to know yet what that might be, but it will be negative. We can't go on forever.

"We really want to bring this thing to a conclusion that's fair to everybody."

That means finding a solution that is fair to Blue Cross' profit margins, fair to the hospital's ability to continue to afford to innovate, renovate and improve its facilities and services, and fair to the patients who deserve a quality community hospital they can come to when in need of care, Paugh said.

"We didn't want to just sit on our hands. We're trying to continue the discussion," he said.


However, part of the process of continuing the discussion included filing a formal complaint with the state Department of Insurance -- a move that BCBS spokesman Lew Borman said "does not demonstrate the tpe of collaboration necessary to work together on these issues."

The complaint focused on three issues:

* Hospital alleges that Blue Cross' policies are unclear and even deceptive about the difference between in-network and out-of-network benefits. Specifically, the hospital claimed that as of Dec. 5, Blue Cross began paying for outpatient services at an allowed amount 39.27 percent lower than it was paying on Dec. 4.

This, the complaint contended, "would expose the hospital to unacceptable losses and would threaten the hospital's very mission of caring for the underserved residents of Wayne County."

* Hospital alleges that by forcing the hospital to bill customers directly for out-of-network services, that Blue Cross is placing an undue, and illegal burden on it. Specifically, the hospital writes, this is a problem for services rendered in the emergency department, which are supposed to be treated as though they are in network.

Furthermore, officials wrote, if Blue Cross will not send all payments directly to the hospital rather than to the patient for emergency services, Wayne Memorial will be forced to institute a $30 administrative fee to cover those added collection costs.

* Hospital alleges that because Blue Cross is the sole insurance provider offering plans on the Affordable Care Act exchange for Wayne County, its cancellation of the contract with Wayne Memorial is "harmful to the citizens of North Carolina in general and the citizens of Wayne County in particular."

Furthermore, hospital officials contend in their complaint that Blue Cross must have a ACA Qualified Health Plan in its network for Wayne County -- and that it now does not, and so should be decertified as Qualified Health Plan issurer.

However, in a letter in response, the state Department of Insurance declined to take any action on the complaints, noting the "contractual nature" of the issue, even as officials pledged to "continue to monitor the situation."

Borman classified the complaints as "unfounded" and "anticonsumer." He also said the hospital had never before brought those concerns to the insurer during the course of negotiations. He also said that in their most recent dialogue, the hospital was still "insist(ing) on longer guaranteed increases and higher increases than any other hospital, on top of their already inflated costs."


But as before, WMH Chief Financial Officer Becky Craig accused Blue Cross of "cherry picking" the highest rates to compare when in fact, "on basket prices, we can't be beat."

She also noted that while Blue Cross continues to say the hospital's outpatient prices are 85 percent higher, that is based on the insurer's internal numbers, and nothing the hospital can dispute.

What she did show, though, is a range of outpatient and inpatient charge information from both the federal Centers for Medicaid and Medicare and the N.C. Hospital Association that show Wayne Memorial is in line with, or below its peer hospitals.

However, she also noted that issue has been largely resolved -- that the two sides have agreed to a blended rate structure dealing with both inpatient and outpatient charges.

But other issues are still standing in the way, most notably how Blue Cross and Blue Shield's allowable rates will increase over the life of the contract, and how those increases will be tied to health care inflation. As of Dec. 5, the last time either side was willing to discuss details of the negotiations, the two sides were about $6 million apart over the course of the proposed three-year contract, with WMH offering to take a revenue reduction of more than $1 million per year, and Blue Cross asking for closer to $3 million per year.


In the meantime, hospital officials say they are trying to protect their patients from the impact of the contract cancellation as much as possible.

It's why the hospital decided to extend in-network considerations to all BCBS patients through March 31 and to BCBS obstetrics patients through Dec. 31.

It's also why the hospital is delaying filing the paperwork for out-of-network procedures done since Dec. 5 as long as possible -- the hospital has 90 days to file with insurance -- to give the two sides time to sign a new contract and come to an agreement about how to deal with those patients.

"We're making (patients) whole at this point," Paugh said. "They're not feeling the effects of being out of network. We're trying not to get the patients stuck in the middle of all this."

And, by and large, Mrs. Craig said, it appears patients are sticking with the hospital so far. She noted that there has been a slight decrease in those with Blue Cross insurance, but said hospital officials do not know yet if it is people putting off procedures to see if the situation is resolved or if people are beginning to trickle to surrounding institutions.