Blue Cross, Care New England in contract dispute

After months of failing to agree on a new contract, Blue Cross & Blue Shield of Rhode Island and Care New England are bracing for the possibility that the health system won’t be in the Blue Cross network as of Jan. 1, though both say they still hope to avoid this outcome.
Care New England, which includes Women & Infants Hospital, Kent Hospital, Butler Hospital and the VNA of Care New England, a major visiting-nurse service, has a four-year contract with Blue Cross that expires on Dec. 31.
Blue Cross accounts for about a third of the organization’s book of business, said John J. Hynes, president and CEO of Care New England. And while the insurer pays more than Medicare or Medicaid, its rates are the lowest of any commercial payer, Hynes said.
“Insurers charge fundamentally the same premiums,” he said, “but what Blue Cross reimburses the hospitals versus the other carriers is very different. … All we’re looking to see is that we get paid comparably for our services to what other insurers pay.”
Hynes added that Care New England’s hospitals have “had some significant struggles,” and they’ve delayed improvements to their facilities that are needed to provide the best and most comfortable patient care. Any extra pay, he said, would go to improving care.
Moreover, Hynes said, all hospitals are struggling with the growing number of uninsured and underinsured patients. Dealing with that problem, he said, is “a community responsibility” that all payers should help with, and all he wants is for Blue Cross to pay its “fair share.”
But that, precisely, is where Blue Cross has drawn the line.
In an interview, President and CEO James E. Purcell said he doesn’t know how much other private insurers pay Care New England, but if it’s more, that’s OK, since Blue Cross is the local nonprofit insurer, covering by far the most people in the state.
And the rates are still high enough, Purcell said, that Care New England acknowledges that it makes a 6- to 8-percent profit on its total Blue Cross book of business. (Hynes disputed that, and said it’s certainly not the case if you count total expenses, not just the cost of direct care.)
The bottom line: Hynes believes Blue Cross should cover a proportional share of all the hospitals’ expenses, including losses from other payers, and he said other insurers’ payments reflect that view. Purcell sees that as an unwarranted subsidy by Blue Cross members.
“Our job is to represent our members and provide affordable health care,” he said. Care New England’s position, he added, is “totally unreasonable.”
Blue Cross made a new offer to Care New England last week that Purcell said exceeds the rate increases offered to any other hospitals in the state. Care New England rejected it; Hynes said it comes “nowhere near” covering the hospitals’ costs.
Should both sides fail to reach an agreement by Dec. 31, Care New England would fall out of the Blue Cross network, and patients who received care at one of the hospitals or from the VNA would have to pay their bills directly, then get reimbursed by Blue Cross at “out of network” rates, which vary by plan type and employer.
Blue Cross alerted the R.I. Department of Health, which approves network changes, in June, but there have been procedural delays, and public comment is still being accepted.
Purcell said he wants to keep Blue Cross members out of this dispute. But Care New England is encouraging its patients – some of whom have been receiving care at the system’s hospitals for decades – to speak out.
And both men stressed that they’ve never been unable to reach a deal before a contract expired, and they still hope they can resolve this situation on time.
“We want to take care of our members,” Purcell said. “We are really trying to bring this to closure. We’ve come pretty far from where we started.”
A formal notice from the R.I. Department of Health and many related documents can be found at www.ri.gov. A longer, more detailed version of this story will appear in our Nov. 3 print issue.