No deal; deadline passes
By Matthew Whittle
Published in News on December 5, 2013 1:46 PM
Unable to come to a new contract agreement, Blue Cross and Blue Shield announced today that Wayne Memorial Hospital is no longer an in-network provider -- effective today.
Negotiations had broken down in September after 18 months of talks, but were restarted in late October by Wayne Memorial CEO Bill Paugh and BCBS of NC CEO Brad Wilson in hopes that an agreement could be reached by Wednesday's deadline.
However, they appeared to break down yet again just before the Thanksgiving holiday.
The primary point of contention was Blue Cross' allowable rate for outpatient procedures.
Under the old contract, which had been in effect since 1995, that rate was a fixed percentage of the hospital's basic charge for a procedure, subject to increase if the hospital's fee schedule changed. Under the original proposal submitted by Blue Cross, its allowable rate would have been a fixed amount, regardless of changes made to the fee schedule.
During the course of negotiations, hospital officials said they agreed to come off the terms of the old contract and allow for a more fixed allowable rate, but that they wanted it tied, at least in part, to the federal Bureau of Labor Statistics' Hospital and Related Services Consumer Price Index.
However, that concession wasn't enough as the two sides found themselves about $6 million apart of the course of the proposed three-year contract. According to hospital officials, Wayne Memorial offered to take a revenue reduction of more than $1 million per year for three years, while Blue Cross was asking for a revenue reduction of closer to $3 million per year for three years.
In their own announcement about the contract termination today, hospital officials said that despite three revised proposals, each with more concessions, over the last several weeks, "Blue Cross continued to offer essentially the same proposal that would result in significant financial loss to Wayne Memorial Hospital."
In the statement, Paugh explained that the hospital's board of directors and leadership team decided that ultimately, accepting the level of reductions sought by Blue Cross was "not in the best interest of ourpatients or our community.
"As a responsible community hospital, we simply can't accept a contract that would have such a negative impact."
However, Blue Cross officials saw the issue differently, saying that Wayne Memorial's outpatient prices were simply too high for the insurance company to continue to pay.
"We regret that the hospital's executives and board chose to reject our proposal rather than agreeing to reasonable terms that would have helped Wayne County families afford their care. At the end of the day, Wayne Memorial's best offer demanded that our customers pay guaranteed annual increases higher than any other hosptial in the state on prices for outpatient services that are far in excess of the statewide average. That's not the way to work toward affordable health care," said Lisa Cade, vice president of network management, in today's statement.
What the decision by Blue Cross to terminate the contract now means is that Wayne Memorial is an out-of-network provider for all Blue Cross and Blue Shield of North Carolina customers except those with Blue Medicare, those with temporary continuity of care agreements and those receiving emergency care.
According to Blue Cross, they will communicate directly with customers regarding their care and will be paying for eligible out-of-network services directly to the patients who will then have to reimburse the hospital. It also said it would work with customers to transition care to surrounding in-network hospitals, including Lenoir Memorial Hospital in Kinston, Wilson Medical Center in Wilson, Johnston Memorial Hospital in Smithfield, Duplin General Hospital (Vidant-Duplin) in Kenansville and Vidant Medical Center in Greenville.
Wayne Memorial, however, has said it will continue to "keep patients' out-of-pocket costs the same as if they were still in-network" through March 31, 2014, and through Dec. 31, 2014, for obstetrics patients.
"We don't want to put our patients in the middle of this situation," said Dr. Christopher Griffin, board of directors chairman, in today's statement. "They shouldn't be forced to pay higher out-of-pocket costs, drive out of area to receive care or delay necessary treatment out of concern for costs. While this isn't a long-term solution, and it is going to be a challenging process, we will do our best to protect our customers from any unnecessary burdens."