BusinessReport.com

With about two weeks until the contract expires between Blue Cross and Blue Shield of Louisiana and the parent group of Our Lady of the Lake Regional Medical Center, a fresh offer from Blue Cross is on the table for reimbursement rates for provider services.

The health insurer sent a proposal today to Franciscan Missionaries of Our Lady Health System, which previously had asked for an 8% payment hike for hospitals and a 12% average increase for physicians and allied providers, according to Blue Cross CEO Mike Reitz; Franciscan disputes those figures, though.

Blue Cross last countered with a 0% increase with some rate relief to FMOL market customers, or a 3% increase along with improved cost transparency.

“It’s different from the original offer,” Reitz says of the new proposal. “It’s a deal that will continue to pay them the highest rate in the state. It is a more than fair rate.” He declined to disclose specifics, saying the offer is “wrapped up in confidentiality right now,” yet says he expects to hear next week from Franciscan. “I’m asking for a quick resolution back from them, yes or no, so we can put this to rest.”

Franciscan CEO John Finan says he is aware of a new proposal but was out of the office this afternoon and had yet to see it. Regardless, he says, “We’re not going to discuss the specifics of the offers. We prefer not to negotiate this in the media. Our last offer is still on the table.” In terms of the health insurance company’s claim about the rate increases that Franciscan previously asked for, he says those figures are not accurate, adding, “Blue Cross doesn’t seem to be constrained by the facts.”

The dispute has taken on a more charged public tone than two years ago, when the last contract negotiation took place, coming down to the wire. After lengthy haggling, Blue Cross and Franciscan agreed to a single-digit reimbursement rate increase for FMOL practitioners.

This time, Blue Cross is on a media blitz, “push polling” by phone to ask state residents how they feel about 45 cents of each insurance dollar paid to Franciscan going to indirect patient care expenses. An advertising campaign on The Advocate’s Web site drove home the same point.

“We did some polling to determine if people were aware of how much money actually did not go to direct patient care and how much was an acceptable level, a reasonable amount,” Reitz says. “It’s an ongoing effort trying to understand consumer behavior.”

Franciscan officials have said annual increases to the cost of providing care mean the health system needs greater reimbursement than it has been offered till now, especially in light of what they say is Blue Cross’s own insurance premium rate hike.

Finan says Blue Cross discussed 2010 premium increases with Franciscan of 7.3% for physicians and 11% for hospitals, with an overall rate hike of 9.5% to members. “Our ‘ask’ in all categories is less than those numbers,” Finan says.

“We want some of those premium dollars to flow back to the providers. Our cost structure rises every year,” says Scott Wester, CEO of OLOL. “Most people want choice as it relates to their health care. The contract dispute — that really disrupts a lot of people’s lives. That makes a lot of people anxious.”

Franciscan’s plan B is to become an out-of-network provider, which Wester says presents a “logistical challenge” in communicating how that would work for Blue Cross patients, who could pay 20% to 30% more for Franciscan provider care without a new contract by Feb. 1. FMOL says it treated 113,000 Blue Cross members throughout the health system last year.

If a deal is not reached, Reitz says, “Our members need to start looking for ways to transition their care to the thousands of professionals out there that are willing to treat them in a more cost-effective setting.”