A month after their negotiations failed, Memorial Health Care System and BlueCross BlueShield of Tennessee announced Tuesday they have reached a new five-year agreement.
The contract allows BlueCross members to use in-network services at Memorial Hospital, Memorial Hospital Hixson and the Mary Ellen Locher Breast Center using Network P and Medicare Advantage programs, according to a joint news release. The contract does not include BlueCross' lower-cost Network S plan. BlueCross officials said the S plan will be available in the future.
Memorial had accepted the same programs as part of the previous contract that expired July 31. The new agreement will begin Saturday.
The two groups declined to release financial information about terms of the contract.
Memorial executives said they will continue to honor their pledge that BlueCross patients who used the hospital in August would not pay higher out-of-network costs.
The agreement ends months of often-contentious negotiations, with both sides blaming the other for failing to agree to reasonable requests about what the reimbursement rates should be in the new contract. Memorial said they only asked for fair market rates, while BlueCross said they were trying to keep down costs for members.
On Tuesday, sides seemed ready to put the disagreement behind them, saying the contract will provide high-quality care to patients.
"This new agreement strikes the right balance between reimbursements that keep costs low and improving quality for our patients," Memorial CEO James Hobson said in the release. "We feel the new contract reimburses Memorial fairly for the services we provide to BlueCross members."
The five-year agreement helps achieve stability in a changing health care environment, said BlueCross CEO-elect Bill Gracey.
"Both BlueCross and Memorial have a responsibility to keep costs low and quality high -- this new agreement helps us to do both," Gracey said in the news release.
The agreement does not include a framework for an accountable care organization. Such an organization, proposed as part of federal health care reform, requires health care providers to care for defined patient populations -- such as Medicare patients -- and be accountable for quality and cost of care, according to a Commonwealth Fund study released in August. The model creates partnerships to help achieve better care and lower cost, the study noted.
However, the Commonwealth survey of hospitals found only 13 percent reported participating or planning to participate within a year in such an organization.
Earlier this month, BlueCross announced it was partnering with Methodist Le Bonheur Healthcare in Memphis to develop the framework for an accountable care organization that would include new care and payment models.
Memorial and BlueCross officials said, even though their agreement does not include a similar plan, it addresses affordability and quality of care for patients.