Tuesday, December 18, 2018

Struggling rural Texas hospitals accuse Blue Cross Blue Shield of 'strongarm tactics' in contract negotiation

Rural hospital administrators across Texas allege that insurer Blue Cross Blue Shield is using "strongarm tactics" to force them to accept unfavorable contracts, Christopher Collins reports for Texas Observer. Blue Cross has considerable clout in Texas, claiming a quarter of the state's marketplace. As much 80 percent of charges at rural hospitals are reimbursed through private insurers like Blue Cross, compared to 20 to 30 percent covered by Medicaid. Unlike most other states, Texas has not expanded Medicaid under the Patient Protection and Affordable Care Act.

Iraan, Texas (Wikipedia map)
At Iraan General Hospital in Iraan (pop. 1,229), a proposed contract this spring "proposed slashing the reimbursements that Blue Cross, the hospital’s biggest source of revenue, would pay for patient services such as outpatient clinic visits and emergency room care," Collins reports. Keith Butler, the new interim CEO at the struggling hospital, told Collins the contract "would have hurt this hospital a lot."

After Butler sent Blue Cross a counteroffer, he said he didn't hear from the company until a few months later when the company began using what he calls "strongarm" tactics. Blue Cross sent letters to customers saying that problems in contract negotiations could lead to the facility being considered out of network for Blue Cross policyholders. "Put simply, patients covered by Blue Cross would have to travel dozens of miles to another hospital if they expected the insurance company to pick up the bill," Collins reports.

Butler says townspeople were angry at him, and that that was the point of Blue Cross's campaign: to create pressure forcing him to sign the original offer. He eventually signed a slightly better deal than the original, but says the hospital will still lose hundreds of thousands of dollars a year on payments for laboratory tests.

Iraan isn't the only rural hospital where Blue Cross has used the same tactics, according to John Henderson, CEO of the Texas Organization of Rural and Community Hospitals. And rural hospitals lack the experience with contract negotiations to fight insurance giants like Blue Cross, he said. Rural hospitals are unlikely to have the leverage to fight with such insurers, especially since state antitrust rules bar rural hospitals from collectively bargaining with Blue Cross to get a better deal.

A spokesperson for Blue Cross Blue Shield of Texas told the Observer in an email that it has pushed renegotiations with some rural hospitals because their outdated contracts "needed to be updated to include new protections for members and employees," Collins reports. "The spokesperson said the company 'continues to negotiate in good faith with a group of rural hospitals across the state' and pointed to a $10 million initiative it funded last month at Texas A&M University to explore new health care delivery options in rural areas."

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