With a looming deadline of 11:59 p.m. on Dec. 31, Moab Regional Hospital (MRH) and Regence Blue Cross / Blue Shield have not yet reached a contractual agreement to provide in-network health care for Moab residents and visitors.
Jennifer Sadoff, director of community relations at MRH, said that going out-of-network is not something the hospital takes lightly, but that the deal being offered by Regence is not sustainable.
“We simply cannot sign a contract that will result in a net loss for the hospital over the next three years,” Sadoff said.
The health insurance giant notified the hospital in July of changes that would be made to its existing contract. Sadoff said that the changes were “really drastic,” and would result in a net loss of 40 percent, or $2.6 million in reimbursement to the hospital.
Under the new proposed contract, Regence wants to reimburse MRH on a fixed-fee for services basis, as opposed to the current operating model, where the hospital is reimbursed on a percentage of costs.
Sadoff said that the per-diem, or fixed-fee model, works in urban areas that provide a high volume of services. But a fixed fee reimbursement is unsustainable for small, rural, “Critical Access Hospitals” (CAHs), given the small margins under which these hospitals operate, Sadoff said.
The parties have been in negotiation ever since. But in late October, the hospital notified Regence that it would terminate negotiations by Nov. 15, in order to give its patients time to find new, in-network coverage before the contract expired. When that deadline came and went, Sadoff said the hospital realized it needed to keep communication open.
“We want to give people every opportunity to change plans in the event that an agreement isn’t reached,” Sadoff said.
Sadoff said the hospital’s first priority is its patients, and that it is exploring options to ensure effective, affordable services for those who will be out of network.
“We are currently networking with other hospitals that have gone out of network to see what options are available for ensuring that patients don’t get caught in the middle of this negotiation,” she said.
Sadoff added that patients covered by Medicare will not be affected, as Medicare operates under a different contract with Regence.
Local resident and retired senior Roy Vaughn said he was initially very worried that he and others like him who receive Medicare benefits through Blue Cross would be affected.
“I found out through talking with Jennifer (Sadoff) that Medicare has a different contract with Blue Cross than the hospital does,” Vaughn said. “But there are a whole bunch of old people like us who don’t have a clue that they don’t need to worry.”
Vaughn was relieved that he didn’t have to worry but he feared for other residents in the community.
“How unfair this is to this community,” he said. “We don’t have any other options than going to another carrier. This is so typical. It’s about making money, not about providing good health care coverage.”
Both Regence and MRH have sent letters to their clients informing them that they have been unable to reach an agreement on rates for reimbursement of services.
In its letter, Regence states that, “The reimbursement requested by the hospital is significantly higher than prices for the same services available from other community providers.”
Moab Regional Hospital CEO Robb Austin said that, “Regence reimburses substantially less than other insurers.”
He wrote a letter to Regence carriers on behalf of the hospital to dispute Regence’s claims, including its assertion that MRH charges more for its services than other hospitals. He cited the Utah Department of Health Hospital Comparison Tool that shows MRH’s charges to be 44 percent below other Utah hospitals.
“In 2014, Moab Regional Hospital received the honor of being named one of the top 100 Critical Access Hospitals in America,” he said. “A primary consideration for this award is affordability, and it was one of the categories that we ranked highest in.”
The MRH letter also encourages customers to explore other healthcare coverage options so they can continue to remain in network.
Moab Regional Hospital has changed insurance providers for its 100 employees, as has the city of Moab. Some private employers, such as Intrepid Potash, have been unable to do so because they are national companies with employees in other states.
Renee Troutt, insurance agent for Central Utah Insurance, said that she is trying very hard to roll over their clients to an in-network carrier, but that in many cases they aren’t competitive.
“If people are on a grandfathered plan with Blue Cross, they often find that new carriers are more expensive because they have to go with a new (Affordable Care Act) compliant plan,” she said.
She said that large group plans have more flexibility in their rates, but that small group and individual rates can’t be adjusted without approval from the state.
Of concern for those who aren’t able to change plans are higher co-pays and deductibles, as well as higher costs for procedures, as the hospital may be forced to “balance bill” patients for the difference that Regence is unwilling to pay.
Lou Riepl, strategic communications manager for Regence, said that by his company’s reading of Utah’s Rural Healthcare Law, it believes that Regence customers will be safeguarded.
“Under the law, Moab Regional Hospital would be prohibited from ‘balance billing’ our members, even if the hospital is not contracted with Regence,” Riepl said. “This means that their deductible or copay/ coinsurance under their benefit plan, plus the reimbursement we allow Moab Regional Hospital as an out-of-network hospital, will be all that it can collect.”
Austin said that there are different interpretations of the law but that he ultimately doesn’t want it to come to that.
“That’s a burden on the whole community,” he said. “We would like to see an acceptable agreement with Blue Cross that doesn’t put the hospital at financial risk.”
Riepl said his company has offered proposals to address the hospital’s concerns, but that its first priority is its members.
“As the state’s first health insurer, Regence’s commitment to Utah members, whether urban or rural, has been well-proven,” he said. “Our priority is to look out for the health care affordability, quality and sustainability interests of our members.”
MRH says Regence Blue Cross / Blue Shield wants to make “drastic” changes to contract
“We are currently networking with other hospitals that have gone out of network to see what options are available for ensuring that patients don’t get caught in the middle of this negotiation,”