Arkansas Blue Cross and Blue Shield, Northwest Medical To End Relationship

Last-minute efforts toward reaching a payment agreement between Community Health Systems and Arkansas Blue Cross and Blue Shield have failed, which will create a change in how thousands of Northwest Arkansas residents will pay for medical services.

Franklin, Tenn.-based Community Health Systems owns several hospitals and clinics in Arkansas. Those in Northwest Arkansas are:

• Northwest Medical Center-Springdale
• Northwest Medical Center-Bentonville
• Northwest Medical Center-Willow Creek Women’s Hospital in Johnson
• Siloam Springs Regional Hospital
• Northwest Benton County Physician Services in Bentonville
• Northwest Physicians group in Springdale
• Siloam Springs Clinic

The company also owns hospitals and clinics in El Dorado, Forrest City, Helena, and Newport.

Essentially, Community Health officials have asked for higher payment for services from Arkansas Blue Cross and Blue Shield, the state’s largest healthcare insurer. Following is the complete statement from Community Health:

We are disappointed we could not come to an agreement. We have worked diligently to negotiate a fair and reasonable contract with Blue Cross Blue Shield Arkansas. Blue Cross Blue Shield Arkansas has not given any material adjustments to our hospital rates in several years, and our request for a basic increase for inpatient and outpatient care, in line with our costs, was warranted.

As with any other community business, hospital expenses continue to increase for such things as employee salaries and benefits, needed supplies, utilities, insurance premiums and the added cost associated with bringing new technology, recruitment of physicians, and needed medical services.

Unfortunately, after many conversations, the two sides could not come to agreement on a contract and our plans to terminate the agreement will be effective September 1. This termination is on behalf of MCSA and its affiliated physicians.

Our Hospital is committed to providing health services to this community 24 hours a day, seven days a week as we always have. Patients with Blue Cross Blue Shield cove

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rage can continue to utilize our hospital as they have in the past, and we will work with each patient on an individual basis going forward.

In a letter dated Aug. 10, Mike Brown, executive vice president and chief operating officer of ABCBS, told customers that the insurer refused to meet the higher payment demands of Community Health. As a result, Community Health hospitals and clinics will no longer receive direct payments from ABCBS beginning Sept. 1.

“Arkansas Blue Cross is already paying CHS hospitals the same rate that we pay all other Arkansas hospitals for outpatient services. And for inpatient services, we actually pay more, on average, to CHS hospitals than we pay for other Arkansas hospitals,” Brown noted in the letter. “CHS doctors also are paid the same rate as all other Arkansas physicians in our networks.”

Brown also noted in the letter that this is the first time in 20 years that ABCBS has not been able to “reach an agreement with a hospital system.”

ABCBS spokeswoman Max Greenwood said Wednesday (Aug. 15) that she is not aware of any meetings between the two groups to resolve the payment dispute prior to Sept. 1.

Brown notified CHS patients of two primary changes. The first is that payment for health plan benefits will be billed directly to the patient, with the patient then responsible to pay the hospital or clinic.

The second change is that previously arranged rates for service with the CHS hospitals or clinics may change.

“(W)ithout a contract with CHS, we no longer can protect you from any amount above our previously agreed upon rates these providers may charge. For that reason, you may want to negotiate payment with these hospitals in advance, should you decide to use them,” Brown noted in his letter.

Community Health Systems owns, operates or leases more than 135 hospitals in 29 states, with about 20,000 licensed beds. Through Quorum Health, the company also provides management and consulting services for 150 independent U.S. hospitals and health systems.

Based in Little Rock, Arkansas Blue Cross employs about 2,875 in Arkansas, and has 377,764 members in various health plans.