Deadline looms for BCBSRI, Care New England deal

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, has a four-year contract with Blue Cross that expires on Dec. 31.
Blue Cross accounts for about one-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.”
In an interview, Blue Cross 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 has acknowledged that it makes a 6- to 8-percent profit on its total Blue Cross book of business. (Hynes, however, disputed that, and said it’s certainly not the case if you count total expenses.
The bottom line is, 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.
In reality, the system does work as Hynes sees it, though many believe it shouldn’t. Hospitals provide millions of dollars’ worth of “charity care” – free or at a reduced price – for the uninsured, and they take a loss on Medicaid, which pays notoriously low rates. Plus Medicare, most hospitals’ biggest payer, has particularly low reimbursement rates for Rhode Island.
The state provides some funds to offset the cost of serving the poor, but the profits on privately insured patients are critical to hospitals’ survival. That’s why hospitals with high ratios of Medicare and Medicaid patients, such as Landmark Medical Center, struggle so much.
Blue Cross often faces extra pressure to help cash-strapped hospitals, because its rates can make a big difference. But just as he did when Landmark pressed for higher pay, Purcell is saying “No” to Care New England.
“Our job is to represent our members and provide affordable health care,” he said. Care New England wants Blue Cross to agree to raise its rates if Medicare and Medicaid losses grow, “like an open checkbook.” he said. “They’re taking a position that is totally unreasonable.”
Blue Cross made a new offer to Care New England last month 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.
Purcell said Blue Cross would reimburse its members roughly as much as it would have paid the hospitals if they did have a contract, but it would be up to Care New England to determine whether it would accept those rates. Many plans also have higher deductibles and other restrictions for out-of-network services; Purcell said Blue Cross is looking into the possibility of making an exception for Care New England.
The R.I. Department of Health, which has to authorize the change in Blue Cross’ network, has extended the public comment period before it makes a decision, and an ad is to be printed alerting patients to the situation – a follow-up to an earlier ad that didn’t elicit a big response.
Care New England, for its part, is urging patients – some of whom have been getting their care at the system’s hospitals for decades – to speak out. It’s also using its buying power as leverage: Care New England has about 4,000 employees in Blue Cross plans, and it’s about to review insurers’ bids in preparation for open enrollment, Hynes said.
Yet 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.” &#8226