A contract dispute between CHI Memorial Health Care System and BlueCross BlueShield of Tennessee could mean thousands of patients would soon be unable to see Memorial providers at in-network rates if an agreement between the two cannot be reached.
In a letter notifying physicians this week, CHI Memorial CEO Janelle Reilly said the health system "has been negotiating in good faith" with the state's largest health insurance company for the past eight months to continue its participation in BlueCross's network.
However, if BlueCross and CHI Memorial - which is owned by Chicago-based CommonSpirit Health - cannot reach an agreement by Sept. 8, the health system's facilities, physicians and services will be out-of-network for patients with either commercial or BlueAdvantage (Medicare Advantage) plans, the letter states. The Chattanooga Heart Institute would be out-of-network for BlueCross members starting Oct. 1.
TennCare patients with BlueCare plans would not be affected by the potential changes.
BlueCross officials said that they were "surprised" and "disappointed" that CHI Memorial initiated a contract termination with only a 60-day notice, before their contract was set to expire.
"We value CHI Memorial and the care they deliver to our members, so we were very disappointed when they chose to terminate our contract early," Todd Ray, senior vice president of provider network management and Medicare products for BlueCross BlueShield of Tennessee, said in an emailed statement.
Marc Barclay, BlueCross's vice president of provider network contracting, said via email that "CHI Memorial's current BCBST agreement had recently renewed, so we were surprised when CHI Memorial issued a 60-day termination notice on July 7, 2021. That meant that we had to immediately begin the process of notifying our members about the potential disruption. Again, we do hope to reach a new agreement, but we are disappointed to be in this position."
CHI Memorial officials said via emailed statement that "while our original expiration date was July 1, 2021, we have been working for the last six months for a fair and balanced increase. Since BCBST was unwilling to reach an agreement, we had no choice but to issue a 60-day termination notice."
In a separate post on CHI Memorial's website, officials said the health system will continue to treat patients with BlueCross commercial and BlueAdvantage plans through Dec. 31 at no additional cost regardless of the negotiation outcome. However, hospital officials have not yet responded to Times Free Press questions about how those costs would be covered should the health system fall out of BlueCross's network.
BlueCross officials said they are obligated to apply out-of-network benefits when a commercial member gets services from an out-of-network provider, and out-of-network claims apply to an out-of-network deductible that's separate from a member's in-network deductible.
That means patients with high deductible plans that have met their in-network deductible may be expecting to pay for only a small portion of services but wind up responsible for the full cost, because they haven't met their out-of-network deductible. For those who have plans with copays, what would normally be a $20, in-network copay could wind up being 40% coinsurance due to the out-of-network deductible, spokesperson John Hawbaker said via email.
"So despite Memorial's claim that they won't charge more, their choice to leave the network will have a cost impact on members," Hawbaker said, noting that "this is especially relevant for employer groups that directly fund costs of their claims."
Medicare Advantage plans have more flexibility, so he said BlueCross plans to apply in-network benefits for those members from Sept. 8 through Oct. 8 should the need arise.
Both sides said that negotiations are ongoing and they hope to reach a resolution that avoids disrupting patient care and the region's health care market before the September deadline.
"Our goal is to renew our contracts. We have every reason to believe that BCBST also wants to reach agreements that will allow patients to continue to be served by seeing CHI Memorial physicians, nurses and other caregivers," Memorial officials said via statement. "The COVID-19 pandemic has emphasized the truly essential nature of high quality, local care. Now more than ever, patients need access to the caregivers and services they trust. Renewed contracts with BCBST will allow us to continue confronting the pandemic and maintain access to essential services."
BlueCross's Ray said via email that "we are still working to reach a new agreement, but we can't agree to pass significant cost increases on to the employers and members we serve."
Contract details between commercial health insurance companies and health care providers are confidential, but disputes between payers and providers in the American health care system often play out publicly. That's because when these disagreements occur, hospitals typically attempt to drum up support among patients and staff to put pressure on the insurer with the hope of coming to a deal.
CHI Memorial and BlueCross last struggled to come to terms with a contract in 2012.
CommonSpirit Health - the nation's largest nonprofit hospital network formed through a merger between Catholic Health Initiatives (CHI) and Dignity Health - has been embroiled in at least two other contract disputes with Blue-affiliated insurance companies since taking over as Memorial's parent company in early 2019.
One dispute, which involved BlueCross BlueShield of Texas and CHI St. Luke's Health in Houston, was resolved in January 2021. Another, between Anthem Blue Cross and Dignity Health in California, on July 16 resulted in more than 1 million patients losing in-network access to care at most of Dignity's California facilities, according to Dignity's website.
Aside from each side wanting to leverage the best deal possible, insurance companies are under increasing pressure from large employers who pay claims for their employees to control the ever-growing cost of health care services.
Hospitals, too, must grapple with the rising costs of health care. Reilly's letter said the COVID-19 pandemic had a "significant" impact on the health system, citing "increased operating costs, workforce shortages and increased levels of uncompensated care."
There are certain BlueCross members, such as inpatients needing ongoing treatment or those in the middle of active treatment for an acute chronic condition like cancer, who may continue to receive care at CHI Memorial at an in-network rate if an agreement can't be reached. Patients should contact BlueCross to determine whether their care or procedure falls under this "continuity of care" clause.
By law, insurance companies must cover care received at a licensed hospital emergency department at an in-network rate even if the hospital is out of network.
In her letter to physicians, Reilly encouraged those with questions to call the hospital's information line - 423-495-2583 - between 9 a.m. and 7 p.m. Monday through Friday. She also said patients can contact their employer or BlueCross to encourage them to retain CHI Memorial.
BlueCross has also updated information on BCBSTinfo.com to help address questions about the negotiations and how failure to reach an agreement would impact members.
Contact Elizabeth Fite at efite@timesfreepress.com or follow her on Twitter @ecfite.