It's a network war with Midwest manners, but Nebraska's largest insurer and health system still have miles to go before a resolution. The impasse may be hurting one organization more than the other.
Blue Cross Blue Shield of Nebraska has found itself in a stalemate with CHI Health, Nebraska's largest health system and a part of Catholic Health Initiatives, the national faith-based hospital chain.
Nebraska Blue's contract with CHI Health and its UnitNet physician network expired last fall, and the organizations have been in negotiations ever since, with the insurer demanding price concessions from what it believes are overpaid hospitals and physicians.
Last year, CHI Health offered a deal that would come with an estimated $10 million in savings compared to 2014's rates, and with reductions to hospital and physician charges at Omaha area hospitals and clinics, could total $80 million in savings.
Nebraska Blue ended up not accepting that offer, with the bone of contention remaining the providers in Omaha, home to four CHI Health hospitals. Nebraska Blue, insurer of 700,000, maintains that CHI Health's Omaha providers cost 10 percent to 30 percent more for the same services than peers in the metro area, on the order of $60 million in total.
From the insurer's vantage point, factoring in requested increases at two facilities, the proposal accounted for less than a 2 percent decrease.
"We carefully evaluated CHI's proposal, but in the final analysis it doesn't do nearly enough to seriously
address the cost differences between CHI and other providers," Nebraska Blue senior vice president Pat Bourne said in November. "We have a responsibility to our members to hold the line on rising healthcare costs."
At the same time, in January Nebraska Blue did start covering members in-network at five CHI Health facilities--all of them outside of metropolitan Omaha.
But for now the deadlock continues for CHI Health's hospitals and physicians in Omaha, and it seems to be hurting both organizations.
Last year, Nebraska Blue fell to last place in J.D. Power's survey of consumer satisfaction with Heartland region insurers, a move the company attributed to the provider network disruption. Local media have profiled some of the dissatisfied members, like Julia Foote, a Grand Island resident who was receiving treatment for early-stage lung cancer at CHI's St. Francis Cancer Treatment Center. A continuity of care provision allowed her to keep getting chemotherapy there for 90 days, but after that she was encouraged by BCBS to find another provider, or else be prepared for out-of-network charges.
Whether the impasse has hurt the insurer's bottom line isn't yet clear. But for CHI Health, there has been a financial impact. CHI laid off 150 staffers in Nebraska amid income declines, and the state's hospitals saw their second quarter fiscal 2015 income fall to $13 million, from $40 million the year before.
Still, CHI Health is optimistic that it will eventually "rejoin the BCBS NE network under mutually agreeable terms."
New value-based contracts with other payers are "effectively diversifying the payer landscape and returning volume to the system, while reducing long-term exposure to BCBS of NE," CHI Health said in its annual report.
In February, CHI Health and Coventry, the Aetna subsidiary, announced a tentative deal for a contract starting for 2016 open enrollment and extending beyond 2017.
The same month, CHI Health and UnitedHealthcare renewed a contract for both individual and employer-sponsored plans, crafting a multi-year relationship with performance-based incentives.
"CHI Health's mission is to build healthy communities by delivering the region's most effective and efficient care," said Cliff Robertson, MD, CEO of CHI Health. "We have built a regional, clinically integrated network to fulfill that mission."
At some point, there will be a resolution to the network skirmish with Nebraska, said Juan Serrano, Catholic Health Initiatives' national senior vice president of payer strategy and operations, a former UHG exec who's helping nurture a small but growing portfolio of CHI health plans.
"In the meantime," Serrano said, "Blue Cross isn't the only insurer in Nebraska. Others continue to offer a full network. We have some very compelling partnerships serving the communities we're in. We view all of our relationships as long-term proposition."