Blue Cross Blue Shield Contract Update

Uvalde Memorial Hospital ended a ten month struggle with Blue Cross Blue Shield of Texas (BCBS) at the end of June, signing a contract with the insurance provider.

The issue began last September when the Employee Retirement System (ERS) of Texas awarded a six-year contract to BCBS impacting healthcare providers and State of Texas employees across the state. ERS manages health insurance plans for state employees, retirees, and their dependents. Effective September 1, 2017, coverage changed for ERS participants, previously covered under HealthSelect of Texas administered by United Healthcare, to BCBS’s Blue Essentials network. Locally, this change affected nearly 1,200 individuals.

Following the contract deal with ERS, BCBS responded by approaching healthcare providers throughout the state with contract changes. Last October BCBS proposed a contract decreasing the hospital’s reimbursement by 13% from the previous contracted rate, a rate that already fell substantially below the Medicare rate.

“To accept a commercial insurance rate below the Medicare fee schedule would not lead to a sustainable business model,” hospital chief financial officer Valerie Lopez stated upon receipt of the proposal.

The hospital board of directors and leadership continued to work diligently each month to review BCBS proposals and come to fair terms. In the mean time, services were still rendered to individuals covered by the BCBS Blue Essentials plan but those patients incurred out-of-network rates translating to higher deductibles and out-of-pocket fees.

“We are working diligently to reach an agreement that allows state employees to receive healthcare locally. We are not pleased that these members of our community have to pay increased amounts or travel outside of their hometown to receive in-network care,” hospital chief executive officer Tom Nordwick stated last December.

The effort to come to fair contract negotiations with BCBS has not only been felt locally. Multiple reports show healthcare facilities across the nation have struggled to reach fair terms with BCBS over the last 18 months. At a healthcare conference in March, a representative from Christus Santa Rosa Health System described BCBS as “non-negotiable” for large hospital systems and emphasized that the burden on rural facilities is even larger.

With the hospital’s agreement to the contract terms in June, UMH requested immediate coverage for individuals with insurance provided through ERS. However, BCBS stated coverage would not be instated until August 1, 2018. Despite the delay, care for state employees covered under the BCBS Blue Essentials network will officially be considered in-network now, a relief to the hospital and the patients alike.