Blue Cross explains decision to drop four rural hospitals

Blue Cross Blue Shield of Oklahoma said four rural hospitals leaving its network engaged in “questionable” practices that would have increased costs for members.

As of Thursday, most Blue Cross plan networks no longer will include four hospitals: Drumright Regional Hospital, Fairfax Community Hospital, Haskell County Community Hospital and Prague Community Hospital.

Patients who have Blue Cross insurance still could go to the hospitals, but would be responsible for a larger share of their bill. To avoid paying more, they would have to drive to a hospital that is in network.

The rupture began when the four hospitals started performing lab tests for doctors not affiliated with them to raise revenue. Insurers typically pay small hospitals a higher rate for each test than large labs, because they perform relatively few tests and have to cover the overhead costs. When hospitals perform more tests at that higher rate, insurers spend more than they planned.

Blue Cross said in a statement that the hospitals drove up customers’ costs, because the patient has to pay for a certain percentage of a test’s costs. It estimated costs at one hospital were more than 50 percent higher than some larger labs.

“There is an alarming trend across the nation of questionable billing practices around laboratory testing that takes advantage of rural communities,” the Blue Cross statement said.

Paul Nusbaum, president of Rural Community Hospitals of America, which owns the four Oklahoma hospitals, as well as small facilities in other states, said the hospitals had offered to stop performing the tests Blue Cross found objectionable, if they could continue their relationship. Instead, Blue Cross offered deep cuts that would have made it financially impossible to serve those customers, he said.

Blue Cross said in a statement that most patients are “selective” and go to a provider other than a local rural hospital. It estimated patients living near one rural hospital chose a different hospital for inpatient care about 94 percent of the time, and for outpatient care about 80 percent of the time.

“Our claims data shows individuals shop for health care services and often are willing to drive further distances for services,” the statement said.

Nusbaum said Blue Cross’ decision puts the hospitals at risk of closing. If hospitals close, rural communities lose their economic viability, he said.

“Rural Oklahomans should be outraged,” he said. “We're fighting to keep these facilities open.”