Following a termination notice in June, medical group CommonSpirit Health, the parent company for CHI St. Luke's Health, and Blue Cross Blue Shield of Texas are attempting to negotiate potentially higher rates before a potential severance of services Dec. 16.
CommonSpirit Health has 15 locations around Texas, including CHI St. Luke's Health-The Woodlands Hospital and CHI St. Luke's Health-The Vintage. If negotiations fail, the hospitals will become out of network for some patients, officials said.
James Campbell, Blue Cross Blue Shield of Texas senior manager of communications, said the original contract that is being negotiated was supposed to last until December 2021.
"Basically, what they are asking for essentially is for their rates to be doubled," Campbell said. "We are saying in this environment where you have a pandemic ... hospitalizations are spiking up again in Houston, and then we get to take our attention away from dealing with our members and getting them access to care .... we have to divert our attention to negotiating a contract that was already in place."
Campbell noted the cost of health care in the Houston area is already around 10% higher than the national average.
"Open enrollment is right around the corner; it opens Nov. 1," Campbell said. "We needed to inform our members that there is a possibility that if you go to CHI St. Luke's Hospital, they may very well be out of network in December."
Jim Parisi, the president of CHI St. Luke's Health-The Woodlands Hospital, said the rate increases are to better reimburse the hospital for the services it provides.
"The most important thing here is that we care about our patients and their families." Parisi said. "At the same time, we provide a very high-quality service, and we have excellent nurses and physicians. We deserve to be reimbursed at a rate that is fair and reasonable."
Vanessa Astros Young, the director of external communications with St. Luke's Health, added the pandemic has had a financial impact.
"In addition to experiencing overall declines in volumes and revenue driven by decreases in elective procedures and outpatient visits during the pandemic, we have also made significant investments in the areas of training, infection prevention protocols and personal protective equipment to keep patients and staff safe during this uncertain time," Astros Young said.
Astros Young added while the pandemic has exacerbated the hospital's financial situation, the negotiations began prior to the pandemic beginning.
Parisi said the hospital will do everything it can to stay in network and continue to provide care for patients.
Should the negotiations fail, Campbell said the hospitals would become out of network for around 40,000 Houston-area Blue Cross Blue Shield members. Across the state, it would impact around 65,000 members, he said.
However, both entities expressed confidence they will come to an agreement prior to the Dec. 16 deadline.
Seth Chandler, a law foundation professor at the University of Houston and an insurance law specialist, said it is becoming more common for brinksmanship to occur with contract negotiations, though he is not aware of either hospitals or insurers exploiting premature termination as a way to drive a harder bargain.
"We've seen it in Houston with Cigna and Memorial Hermann, Blue Cross and CHI St. Lukes and other instances," Chandler said. "It has been happening in Florida, Georgia and elsewhere too. The problem with brinksmanship is that in order to be most effective, every once in a while you have to go over the brink. The victims when that happens are mostly patients needing health care, a particularly tough consequence in the year 2020."
Chandler added it becomes a lose-lose situation if a major hospital breaks with a major insurer.
"It means that a lot of insured persons are now going to have to scramble to find alternative hospitals, which is at best inconvenient and at worst medically harmful," Chandler said. "For hospitals, it means a major source of revenue disappears, further straining on finances already challenged by COVID-19. Perhaps a few patients will be able to pay out-of-network rates for the hospital, but many will find this very challenging."
