UPDATE: Memorial, BlueCross negotiations stalled - WRCBtv.com | Chattanooga News, Weather & Sports

UPDATE: Memorial, BlueCross negotiations stalled

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CHATTANOOGA (WRCB) – Contract negotiations between a local hospital and insurance giant have stalled.

Memorial Health Care System and BlueCross BlueShield announced Thursday that an agreement for the hospital to remain in the insurer's network has not been reached.

Memorial officials say BlueCross turned down a 30-day contract extension. BlueCross officials say that extension was linked to increasing financial demands and not in the best interests of its customers. 

Memorial officials say that if an agreement is no reached, patients with the insurer will be out of network August 1.

Both sides say they remain open to continuing negotiations.

Read a full release from BlueCross BlueShield and Memorial Health Care System below:

Memorial Health Care System:

'Over the last several months, Memorial officials have made some progress in negotiations with BlueCross Blue Shield of Tennessee, but unfortunately announced there is still more work to do and BlueCross is unwilling to extend the contract for another 30 days.  "We had hoped they would accept this 30-day extension so we could finalize the details of the contract while remaining in-network," said Jim Hobson, president and CEO of Memorial Health Care System.  As a result, on August 1st Memorial will be out-of-network with BlueCross.  Memorial physicians, The Chattanooga Heart Institute physicians, and Memorial Mission Surgery Center are not affected by these negotiations and will remain in-network.

Memorial has taken steps to protect its patients with BlueCross health insurance from additional financial burden. "In a typical situation where patients receive out-of-network services from us, we would collect additional copayment and/or coinsurance amounts from patients because their health plan would pay less of our charges, said Mr. Hobson.  "However, we are extending our discounted in-network rates to patient and to their plan, even though we are now out-of-network, and we will not need to collect such additional amounts from our patients, even though Tennessee law would otherwise allow it.  We will take care of our patients no matter what," he said. 

Memorial says its last proposal  – a long-term contract with annual rate adjustments well below Blue Cross premium increases – is on the table for BlueCross to consider. "We remain open to discussions, and we hope BlueCross will do the same," explains Mr. Hobson.  Yet, as it stands, Memorial will be out of network on August 1st.  

Mr. Hobson said, "We are committed to protecting our patients and this community and patients can contact us at 423-495-2286 or visit www.memorial.org with questions."

From BlueCross BlueShield:

"After months of negotiations, BlueCross BlueShield of Tennessee now expects Memorial Health Care System to withdraw from its Network "P." BlueCross has worked diligently to reach mutually agreeable terms for a new contract and remains open to conversations with the hospital.

"After several months with very little movement on Memorial's part, we made the difficult decision to accept their decision to terminate the contract," said Roy Vaughn, vice president of corporate communications for BlueCross. "We are now moving forward to ensure our members get the care they need during this transition."

"Memorial's request for a 30-day contract extension was linked to ever-increasing financial demands and other terms we cannot accept in the best interest of our members," Vaughn said.

According to publicly-available data reported by hospitals, BlueCross already pays Memorial rates that are in the competitive range for the Chattanooga marketplace. The same data also shows Memorial to be the most profitable hospital system in the region. BlueCross has an independent, third-party analysis which estimates Memorial earns a 30 percent profit margin from the rates the insurer currently pays.

"For BlueCross, the disagreement with Memorial is about keeping health care affordable," Vaughn said. "With Memorial, or any health care provider, we seek to pay reasonable rates that provide a fair margin for them while at the same time keeping coverage affordable for members. What we pay for medical care directly impacts what we charge in premiums."

BlueCross rates are subject to regulatory reviews and approvals, and they reflect the trust cost of care premiums must cover. BlueCross is subject to regulations that define exactly how much of its premiums are required to be spent on direct medical costs. The same does not hold true for Memorial."


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