Health care rates cause rift

CHI Memorial, BlueCross at odds over expenses

Officials from Tennessee’s largest health insurance company are in a contract dispute with CommonSpirit https://www.timesfreepress.com/news/2024/feb/13/morehouse-college-of-medicine-eyes-potential/ https://www.timesfreepress.com/news/2024/feb/13/morehouse-college-of-medicine-eyes-potential/ Health, parent company to Chattanooga-based CHI Memorial, claiming the health system is demanding a rate increase that would make Memorial the highest-paid hospital in the state.

In a letter posted on the BlueCross BlueShield of Tennessee’s website, Scott Pierce, the insurance company’s chief operating officer, said that since becoming part of Chicago-based CommonSpirit in 2019, Memorial has “repeatedly pushed us to pay them higher and higher rates.”

If an agreement between the two cannot be reached by June 30, when the current agreement between BlueCross and Memorial is set to expire, thousands of patients with BlueCross insurance will be considered out of network at Memorial.

“CommonSpirit asked for an increase of roughly $70 million over three years, a nearly 40% jump in rates, which would make Memorial the most expensive hospital system in the state,” said the letter from Pierce.

As two examples of how a rate increase would affect consumers, Pierce said business owners covering 125 people on their health plans would pay around $100,000 more in premiums over the next three years, while a patient’s CT scan would cost more than $500, a $150 increase.

Memorial spokesperson Karen Long said via email that BlueCross’ reimbursement to Memorial is not the highest in Tennessee nor the market of Chattanooga.

Neither side could share details about reimbursement rate comparisons to other hospital systems because commercial insurance contracts are proprietary.

BlueCross officials said they have offered to keep Memorial’s doctors in-network regardless of what happens. The insurer has also issued a request for proposals for another health system to bid for Memorial’s slot in the local Blue Network S, which currently includes Erlanger Health and Memorial.

More than half of BlueCross’ commercial members in the Chattanooga region who use Memorial have a Network S plan, officials said.

Long said hospitals across the state, including Memorial, are struggling with soaring costs — citing a 2023 report from the Tennessee Hospital Association that found 57% of hospitals in the state had reduced or eliminated services due to financial challenges.

“CHI Memorial is focused first and foremost on the needs of our patients and our ability to sustain critical services for our communities,” Long said, noting that CHI Memorial’s costs have risen 30% since before the pandemic.

“BCBST, on the other hand, is sitting on cash reserves of $4.1 billion, including $1.4 billion more than required by the state insurance commission, so we know they are able to provide this relief without raising costs for employers,” Long said.

BlueCross’s reimbursements have not even kept up with inflation over the past several years, according to Long.

“We are simply asking BCBST to pay us fairly so we can cope with increasing costs while continuing to provide high-quality, high-value care,” she said. “We have every intention of reaching a fair agreement before our current contract expires on June 30, and we hope BCBST shares our goal of preserving patient access.”

In a separate letter to the insurer’s employer customers, Chief Marketing Officer Robin Young said tapping reserves would be unwise.

“CHI Memorial thinks we should use our reserves to meet their demands for higher rates,” Young said. “At best, that’s a shortterm fix for the long-term problem of rising medical costs. And our reserves are here to help us protect you through unpredictable events like the pandemic.”

Prior to the current dispute, CHI Memorial and BlueCross most recently struggled to come to terms in 2021.

Pierce said in his letter that BlueCross agreed to pay higher rates “after extensive negotiations.”

“This unfortunately increased costs for those we serve,” he said, “but it was the only way to limit the disruption during a pandemic.”