published Saturday, August 4th, 2012

A brewing health care battle

Memorial Hospital's chief executives predictably view their stalemated talks for a new insurance contract on reimbursements differently than do Blue Cross Blue Shield officials.

Blue Cross leaders say they are working to keep down hospital charges and reimbursements, and that Memorial is demanding excessive charges that flout the public interest in cost control. Memorial's leaders contend the hospital deserves an 8.5 percent increase in reimbursements because health care industry costs continue to rise, and because their hospital -- and its owner, Catholic Health Initiatives, a Denver-based 76-hospital chain — need to keep its profit margins healthy, and bring them up to corporate expectations.

That snapshot doesn't begin to flesh out the complex business equation that has driven Memorial and Blue Cross to a harsh divide. But it frames what is likely to become a major health care battle here over cost-control, which if not resolved will confront Memorial's patients with Blue Cross with significantly higher out-of-network costs.

It doesn't take an accountant to recognize the essential stakes of the brewing battle. This conflict pits the overriding need to contain hospital costs versus a hospital chain that operates under a religious, nonprofit, tax-exempt status, but that focuses heavily on three high-profit lines of service while providing relatively little in public health needs as compared to Erlanger and Parkridge hospitals. Erlanger, for example, had uncompensated indigent-care costs (not charges) of more than $70 million last year; Memorial had $7 million in indigent-care costs.

In 2010, Memorial earned $43 million in profits and retained earnings; in 2011, that figure rose to $49 million, though only $22 million — or 2.5 percent of profits — were from operations, Memorial officials said. Meanwhile, Erlanger dipped into the red.

Memorial officials contend they only seek the reimbursement levels they believe are provided by Blue Cross to Parkridge. Blue Cross says their reimbursement rates vary on line items, but generally reflect a range of issues, including the provision of obstetrics/gynecology, which Memorial shuns, as well as indigent care.

The larger public interest is not simply to provide ever-higher profits to profit-oriented hospitals. Rather, it lies in cost containment and fair burden-sharing of public health-care costs. That formulation favors Blue Cross' position far more than Memorial's.

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deembook said...

This is regarding money,money, money ---- but really as a BCBST subscriber I really do not like the last letter I rec'd from Memorial stating, "BlueCross doesn't have to make you pay a higher deductible or a higher co-pay. They can join Memorial in honoring in-network requirements. In the example above (i.e. shows in-net & out-of-net samples), BlueCross may make you pay nearly $3,200 more before ever paying a dime for your health care. They don't have to do that, but they may." REALLY !!! ??? I have a contract with BCBST stating they if I chose to use a non-network carrier I am responsible to pay as such. Let's face it both companies are in the money making business but I don't like the scare tactic that Memorial is using to the uninformed insured by BCBST. I have worked in medical billing for years and I know that many insurance subscribers do not truly understand how their own insurance works and Memorial knows this as they deal with it daily. Go BCBST - they stopped using Memorial because an agreement could not be met . Get your act together Memorial be honest both of you want to make money no need to scare people. I have used Memorial for years I will not at this time because they are now non-network and I don't wish to pay out of network. If Memorial states they will write off the difference then why not sign the contract?

August 22, 2012 at 5:11 p.m.
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