Blue Cross and Blue Shield of Louisiana and the parent group of Our Lady of the Lake Regional Medical Center are going directly to residents in their war of words over a new contract beginning Feb. 1.
Both sent out mailings recently in the disagreement over whether Franciscan Missionaries of Our Lady Health System doctors and hospitals would stay in the Blue Cross network. Blue Cross says in its mailing that the health insurer keeps 2 cents of every premium dollar for emergency reserves. It says 14 cents of each dollar goes to in-house salaries, other operating costs and taxes, while 84 cents goes toward physician services and hospital costs. On the other hand, the insurer says 55 cents of each dollar it pays to OLOL goes toward customer medical expenses, while 30 cents goes to subsidize Medicaid, Medicare and uninsured patients, and 15 cents goes to charitable work and other spending.
“The bottom line on these negotiations is, they are by far the highest-paid hospital system in the state, and they want more and they can’t justify why,” says Mike Reitz, CEO for Blue Cross and Blue Shield of Louisiana. “We’ve been meeting for months and months and months to understand their cost structure. There is no justification that’s been delivered at this point.”
In terms of OLOL and FMOL’s mission work, Reitz says those costs have been “loaded” into Blue Cross premiums, and his customers are “irate” to learn where their money is going. “Maybe if they wanted to give to a charitable donation, they might write that off instead of running it through their insurance premiums,” he says.
FMOL says in a recent letter that it wants a “modest single-digit increase” to the rates the insurer pays the health system in order to keep up with rising care costs and to continue underwriting “unprofitable services that other hospitals and doctors either choose not to or can’t,” such as AIDS patient and trauma victim care. It also encourages customers to contact Blue Cross and tell the insurer: “I would much rather switch insurance providers than doctors and hospitals. I plan to speak with my employer about switching plans or offering more options that include Franciscan Missionaries of Our Lady Health System in its network.”
Reitz says Franciscan is requesting an 8% payment hike for hospitals and a 12% average increase for physicians and allied providers, while Blue Cross has offered either a 0% increase with some rate relief to FMOL market customers or a 3% increase along with improved cost transparency.
“Sell your value proposition to the marketplace,” Reitz says, noting of OLOL, “The customer now knows that that is a more expensive facility, and they have to be sold by the hospital that it’s worth it.”
Scott Wester, president and CEO of OLOL, says while he has heard of the 3% offer to Franciscan, it came with a catch. “It was a 3% increase plus an additional $4,000 surcharge per member per visit to any of our hospitals across the state,” he says. “That’s money the patient would have to pay out of their pocket. We think it’s outrageous for a patient to be penalized by Blue Cross, on top of the high premiums they already pay.”
He did not have details on whether that surcharge would apply to certain kinds of care, certain patients or across the board. “We never got into the level of detail,” Wester says. “That’s never been an offer that we’ve been willing to even think of.”
Wester says the reality of health care financing is that the insured pay to cover the cost of the uninsured and those who aren’t fully insured, and that both Blue Cross and Franciscan realize the system needs to change. “In today’s environment, that’s how health care financing works,” he says. “That mechanism is a reality in the Baton Rouge market. That financing mechanism just doesn’t play well, that puts a lot of burden on health care providers and hospitals and employers across the country.”
