THR and BCBSTX Renew PPO Agreement

11:36 PM CST on Friday, December 17, 2010

By JASON ROBERSON / The Dallas Morning News
jroberson@dallasnews.com

Just two weeks before more than 1.3 million North Texans would have been forced to scramble for new doctors, the region’s largest insurer and largest hospital system agreed late Friday on new contracts.

The multiyear agreement will allow Texas Health Resources’ 24 hospitals, 18 outpatient facilities and physicians to remain in the network of Blue Cross Blue Shield of Texas.

For several weeks the Arlington-based hospital system and Richardson-based insurer took public stabs at each other as they neared a Dec. 31 deadline to sign a new contract covering reimbursement rates.  (See http://blog.riskmanagers.us/?p=4550) After that date, Texas Health could have been considered out-of-network for Blue Cross members.

“We’ve worked hard over the past several months, and it has resulted in the right agreement for our patients,” said Douglas Hawthorne, chief executive of Texas Health.

“The new agreement focuses both parties on improving the long-term affordability of health-care services,” said Blue Cross president Darren Rodgers.

In recent interviews, the two have disagreed on who bears more blame for expensive health care. However, both have said it’s time to base health-care payments on the value of care, not the volume of care.

Dispute details

The companies gave no clues about what’s in the new contract. Blue Cross had said Texas Health was demanding an additional $120 million over three years to cover cost increases. Texas Health had complained that Blue Cross wanted to give it a lump sum payment rather than reimburse for health services after care was delivered.

In many ways, the contract dispute is a study in health care’s corporate power shift. Twenty years ago, it may have been unlikely for a hospital to go toe to toe with the likes of Blue Cross. Hospitals were more fragmented, negotiating on a solo basis.

In the 1990s, hospitals began consolidating. Texas Health was formed in 1997 by combining the Fort Worth-based Harris Methodist Health System with Dallas-based Presbyterian Healthcare Resources.

The dispute also underscores the widespread frustration over rising health care expenses. Insurers are under pressure from employers to contain costs. Hospitals are under pressure to deliver quality care for an increasing number of uninsured patients, which drives up costs.

In Dallas, total health benefits cost an average $9,174 per employee this year. Local employers are expecting a 5.4 percent increase in health care costs, according to a survey from Mercer, a consulting, outsourcing and investment firm.

Editor’s Note: A reader of this blog sent the following note:

     As we all knew Blue capitulated to the almighty Texas Health Resources before 1/1.  It even says 20 years ago “it may have been unlikely for a hospital to go toe to toe with the likes of Blue Cross.  Hospitals were more fragmented, negotiating on a solo basis”.  “In the 1990s, hospitals began consolidating. Texas Health was formed in 1997 by combining the Fort Worth-based Harris Methodist Health System with Dallas-based Presbyterian Healthcare Resources”.   The article basically says even the almighty Blue cannot negotiate with these powerful hospital systems and this is why costs are rising at an exponential rate. 

When is the American public going to “wake up and smell the coffee” about the abuse we are taking by paying such high costs to these monopolies.   I predict the government will have to step in if we don’t try using the free-market system of competition under cost plus and direct contracting.    The article says both parties will not reveal what is in the contract.  Imagine the secret negotiations.  Employers are tired of this backroom dealing along with rising costs.  We know Blue as a carrier will be passing on this huge increase to employers and will somehow still make more money themselves.  Thus both parties won and the losers are employers/employees.   We heard that THR was also demanding a “no audit” clause to be signed but graciously gave a bigger “discount” for this term.   THR has been demanding this in the last year with all PPO’s.  The power has shifted in the last 10 years to the hospitals and we definitely need change.

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