Leslie Turk

Once again, Blue Cross plays hardball

by Leslie Turk

The national health care debate has fueled so much anxiety over coverage and access that it seems downright unprofessional, at the very least unfair, for the state’s largest health insurer and largest provider to once again air their financial dirty laundry in the media. Less than two years ago, it was the same saga, with a last-minute deal that renewed the affiliation — until yesterday.

In what the Franciscan Missionaries of Our Lady Health System, parent of Our Lady of Lourdes and Heart Hospital of Lafayette, claims caught it off guard, Blue Cross Blue Shield of Louisiana yesterday issued a press release titled “Franciscan Missionaries of Our Lady Health System Leaves Blue Cross and Blue Shield of Louisiana Network.” The release stated that FMOL had decided it would not renew its contracts with the insurer. The release continued, “Effective Feb. 1, 2010, the FMOL System's hospitals and certain affiliated providers will no longer be contracted as in-network providers for the state's largest health care insurer."

Nothing like a little extra holiday angst for the more than 100,000 Acadiana residents, including the Lafayette Parish School System, with Blue Cross Blue Shield coverage.

“It’s the way they negotiate, apparently,” Our Lady of Lourdes President and CEO Bud Barrow told the INDsider yesterday afternoon. “I would say I was not surprised but disappointed. Several years ago we had a similar surprise release from them when we were in the middle of negotiations. The difference being this time we are 52 days away from the end of the contract and last time we were just several days, or maybe even hours away and, of course, we did conclude an arrangement at the 11th hour.”

Not so, says Blue Cross spokesman John Maginnis, who insists that Blue Cross CEO Mike Reitz clearly communicated with FMOL at the end of yesterday morning's conference call that it would inform all concerned parties, including the public at large, that the two were too far apart to reach an agreement. “He did make that statement as he left,” Maginnis says.

Other hospitals in the FMOL system include Our Lady of the Lake Regional Medical Center in Baton Rouge, The Tau Center of Baton Rouge, St. Elizabeth Hospital in Gonzales, two St. Francis campuses in Monroe, and Assumption Community Hospital in Napoleonville.

Barrow said FMOL officials have been suggesting to Blue Cross since June it was FMOL’s goal to conclude the negotiations about 60 days before the contract ended, “so that nobody would be left in the lurch, that there would not be unnecessary anxiety, and that there wouldn’t be concerns on the part of employers or subscribers.”

“We have tried to take a consistent, straightforward Franciscan approach and ... to keep the negotiations private and hopefully speedily and acceptably done for everybody,” Barrow continued. “As of 10:30 [Wednesday] when we had a conference call, we even made the issue of bringing in a neutral third party, a mediator [that] Blue Cross could help us choose. I think our feeling was we were expecting to hear within 24 hours who they thought a good mediator might be and that we could get to some conclusion fairly quickly. We were expecting conversations to take place tomorrow, probably Friday and into next week.”

FMOL characterizes its request as a single digit increase, but Blue Cross calls it a multi-million dollar increase to reimbursement rates. “This is on top of the $200 million we’ve paid FMOL in the last 12 months on behalf of our members,” wrote Senior Vice President and Chief Marketing Officer Brian Keller in a separate Dec. 9 statement addressed to “Group & Individual Producers” and obtained by the INDsider. “We’ve been given no acceptable justification for this request, so we cannot in good conscience agree to the increase, since it inevitably comes from the pockets of our members.”

And many of those members will dig deeper into their pockets in 2010. One local insurance exec tells the INDsider that Blue Cross Blue Shield is increasing some premiums by as much as 20 percent. “I can’t comment on that; I don’t know about percentages,” says Maginnis, noting that the current national trend is a 10 percent increase in premiums, though other factors could push that higher.

For competitive reasons, Barrow would not disclose the amount FMOL is seeking. “We’re still in the middle of negotiations. To share that kind of information could conceivable put us all at a disadvantage with the different hospitals we compete with in our local markets. Let me say this, they were offering after multiple negotiation sessions a zero percent increase. Our feeling would be this: if they were willing to keep premium increases to zero for local employers and subscribers then zero percent increase for hospitals and physicians might make sense. And we’ve told them that,” he continued. “We are happy to keep our increase from Blue Cross in alignment with the increases or a lack thereof that they pass on to their subscribers."

Maginnis, however, did not hesitate this morning to disclose FMOL's request. He says FMOL is asking for a 9 percent increase, which would amount to about $18 million annually. He says the reimbursement rate to FMOL is already the highest in the state, “by a substantial amount.”

In its press release Blue Cross says its door is always open to FMOL and that “we will welcome them back into the network if they choose to accept our offer. We recognize the value they bring to our provider networks.”

FMOL remains hopeful an agreement will be reached before Jan. 31.