UMMC / BCBS Squabble

The following article (Posted on Linkedin by Carl Schuessler) brings to mind deeper issues than the “surface” issues most consumers reading this will take away. The article hints of a gold mine of information leading to more questions than answers.

For example, is it true medical caregivers participating in managed care networks are legally prohibited from offering discounts directly to patients? (“UMMC cannot legally offer discounts directly to patients who have insurance.”) We’ve heard that before here in Texas and found it to be as yet unproven. (and if it’s true there could be a whole lot of people in big trouble!) –  Bill Rusteberg

Patients to pay up to 29 times more over fight between UMMC and Blue Cross & Blue Shield

Anna Wolfe, Mississippi Clarion LedgerPublished 11:46 a.m. CT June 27, 2018 | Updated 5:19 p.m. CT

UMMC officials explain why they are cancelling their contract with the state’s largest health insurance provider, Blue Cross & Blue Shield of Mississippi, on June 30. Wochit


If University of Mississippi Medical Center and Blue Cross & Blue Shield of Mississippi do not agree on a new contract by Sunday, it will be patients who pay  — sometimes 29 times more.

Where patients covered by the largest insurer in the state pay $177 for a colonoscopy with biopsy under the current contract, the new bill will be $5,135 if a deal is not made, according to estimates the Mississippi Insurance Department provided Clarion Ledger.

By Wednesday, UMMC and Blue Cross had reached a stalemate, with the teaching hospital asking for higher, set-in-stone payment rates that consider its unique role as the state’s only academic medical center. On the other side, Blue Cross says UMMC has been uncooperative in the partnership and has not earned the opportunity to be treated specially.

While both entities downplayed the impact on patients in May when they announced that their contract would be terminated July 1, many Blue Cross members who continue visiting UMMC will be charged enormous out-of-pocket costs if the two do not reach an agreement.

The patient’s portion of a bill for an MRI of his or her spine will shoot from $171 to $1,752.

This assumes a patient’s insurance plan requires a 20 percent co-payment and has already met the deductible. This also does not include professional charges — charges from a doctor, for example.

The examples illustrate the huge difference between in-network and out-of-network medical bills.

More: Still no contract between UMMC and Blue Cross; consumers’ pocketbooks hang in balance

A vaginal delivery with no complications will cost a patient five times more — from $1,896 to $10,566. This example assumes the patient has a $1,500 deductible. (However, if a woman is already receiving care from UMMC for a pregnancy, she will likely continue being served as an in-network patient through this contract dispute.)

Insurers don’t share their negotiated rates publicly, so it’s impossible to know how Blue Cross & Blue Shield’s rates compare to other insurers’, but UMMC CEO Kevin Cook said they are significantly lower.

Blue Cross declined repeated requests for an interview.

Clarion Ledger asked both UnitedHealthcare and Cigna to share their rates on these services and they would not provide the information, citing confidentiality. Cook said it would be illegal for him to share other insurers’ negotiated rates.

If the two sides fail to work out a deal before July 1, Cook said patients who have Blue Cross & Blue Shield of Mississippi insurance and are receiving ongoing treatment at UMMC for established diagnoses might be able to continue receiving care at the hospital as in-network patients.

UMMC said it would also continue to treat emergencies of patients with Blue Cross insurance as in-network patients.

The changes do not apply to patients covered by the State and School Employees’ Health Insurance Plan, because the state is self-insured and Blue Cross only administers the plan.

Insurance Commissioner Mike Chaney said he has urged Blue Cross & Blue Shield to continue paying the in-network rates to UMMC.

The problem is, the largest portion of a medical bill is usually taken care of through an insurer’s negotiated discount with the provider, and that goes away if there is no contract.

UMMC charges a set rate of $5,667 for a colonoscopy, but under its current contract with Blue Cross, $4,780 is discounted, or written off.

That leaves the insurer’s “allowable amount” of $887.

If there is no agreement, the entire balance of $4,780 — plus a larger co-insurance rate since the insurer is no longer in-network — falls on the patient. Even if Blue Cross keeps paying its in-network rate, the patient will receive a $4,957 bill for a colonoscopy.

Every hospital has a chargemaster — a list of services and their corresponding prices. The chargemaster is full of bloated, seemingly made-up prices, often criticized as arbitrary and written off as irrelevant.

Some hospital administrators have argued that what a hospital charges doesn’t matter because patients don’t pay that amount and insurers typically receive a discount.

But the conflict between UMMC and Blue Cross illustrates “one of those rare instances where the chargemaster actually matters,” Cook said.

Jerry Mitchell: UMMC, Blue Cross slugging it out over contract

“Most of the time it doesn’t,” Cook said. “That’s why we hate it. That’s why we don’t like the impact. We’re sorry for the impact this is going to have on patients.”

A self-pay patient, who has no insurance and has not been paying a monthly premium, would receive a 60 percent discount off the chargemaster rate immediately, bringing their bill for a colonoscopy down to $2,266.

Cook said UMMC cannot legally offer discounts directly to patients who have insurance.

Chaney said if a contract between UMMC and Blue Cross & Blue Shield is lost, it could confuse billing for over 700 physicians employed by the hospital who have negotiated their own contracts with the insurer.

“It’s really going to get complicated … if UMMC takes the position they (physicians) are employees and cannot sign agreements (with Blue Cross & Blue Shield),” Chaney said. “It’s just a cluster.”

Cook said UMMC is working to terminate contracts between Blue Cross and all employees of the hospital.

What’s in a medical bill?: CL health reporter asks for your stories

The contract kerfuffle

Cook said UMMC’s 28-year-old contract with Blue Cross allows the payer to change rates unilaterally without telling the medical center and does not ensure that any rate changes the two negotiate will actually take effect.

“It isn’t merely about dollars in this relationship. The contract itself is really the biggest issue, but the rates are a portion of the conversation as well,” Cook said. “Blue Cross Blue Shield plays a unique role in the state of Mississippi just because of their size and scope. We play a unique role being the only academic medical center in the state of Mississippi. We carry infrastructure here that nobody else carries in the system of care. Around the country, payers recognize that academic medical centers carry specialized infrastructure … Blue Cross has said that they don’t care.”

Cook said UMMC uses clinical dollars to fund residencies and other teaching and research infrastructure.

Blue Cross & Blue Shield of Mississippi has assets of $962 million, with more than $627 million sitting in reserves, and has more members than any other insurer.

“Those are dollars that should have gone back to the customers of Blue Cross or should have gone into the system of care in the state of Mississippi,” Cook said. “If you recognize the role this institution plays in the state of Mississippi, and the burden we carry … Don’t you think Blue Cross has some measure of responsibility to help outcarry the infrastructure for the state?”

Chaney sent a letter to UMMC and Blue Cross, asking for them to meet with a professional mediator. Both sides have agreed, but Blue Cross said its schedule would not allow for a meeting before June 30.

Balance billing

Mississippi prohibits “balance billing” — when providers bill patients the difference between the charged amount and the insurer’s “allowable amount” — under a law few in the state seem to know about.

But the law only applies when the provider accepts the assignment of benefits and bills the insurance company directly.

Chaney and Blue Cross have both urged UMMC not to balance bill patients who are newly out-of-network, but that would render contract negotiations essentially useless for UMMC.

UMMC said it will continue filing out-of-network claims with Blue Cross, but will not technically “accept the insurance assignment,” which means it can bill the patient for the difference.

The burning question

Aside from arguments on either side of the contract dispute, one burning question remains: Why is the price of a colonoscopy at UMMC $5,667?

Medicare — the rates of which are set by the federal government based on the cost to perform the service — pays $213 for a colonoscopy.

Most hospitals argue Medicare and Medicaid — which has an even lower reimbursement rate — do not cover their costs, so they lose money on those patients. But they also receive subsidies from the federal government under the Disproportionate Share Hospital program to make up for these losses.

Under the current Blue Cross contract, UMMC receives $887 for a colonoscopy performed on one of the insurer’s policyholders.

So where does the $5,667 price come from?

Bloated chargemaster prices are an industry wide issue, Cook explained, which worsened over decades because of the way contracts between hospitals and commercial payers are written.

“It’s the result of a system that has been less than rational for a very long time in this industry,” Cook said. “The only way hospitals could get the increases from the payers was to increase their chargemaster.”

But contracts usually dictated hospitals be paid a small percentage of the charges.

“For hospitals to get paid the increase they needed from commercial payers … they would ramp up their chargemaster,” Cook said. “Oftentimes they were recouping pennies … In order to get a two or three percent increase, our charges would have to go up disproportionately to get that small increase from the payer. So that’s how you got out-of-control chargemasters. And the whole industry is tied to this system.”

Neither dollar amount — the chargemaster nor the negotiated rate from payers —corresponds with the cost of the service. That’s because, Cook explained, the cost of each individual service is very difficult to calculate, especially in a teaching hospital that serves many indigent patients.

Instead, Cook said, “We want the economics to work out such that we keep the doors open.”

“It’s an imperfect design of the whole,” he said. “So we attempt, through the various levers we have to move, to get to the place where the place is year over year economically viable.”

UMMC officials shared this chart to show that the prices they charge are below the vast majority of teaching hospitals. (Photo: UMMC)

More: Nearly $9,000 for earlobe procedure: What’s in a UMMC medical bill?

More: You might not have to pay that medical bill. Here’s the law you need to know.

Have your own health care story? We want to tell it. Contact Anna Wolfe at 601-961-7326 or Follow her on Twitter.