People on Blue Cross Blue Shield of Minnesota health insurance will be relieved to find out that their insurance will continue to cover Cook County North Shore Hospital services at least through the end of the year.
Blue Cross notified North Shore Hospital & Care Center in February that it would require a new and complicated billing system starting March 1, 2013. North Shore Hospital Administrator Kimber Wraalstad swung into action along with advocates of small, critical access hospitals across the state, protesting the change and telling Blue Cross that unless an acceptable agreement was made, the hospital would need to terminate its status as a Blue Cross provider.
Wraalstad took issue with both the timeframe—since the new system would require staff training and new software — and the reimbursement amounts. The new billing system “bundles” sets of services and would not cover all of North Shore Hospital’s costs, resulting in significant financial losses.
Blue Cross modified its start-up date to May 1 but told North Shore Hospital that it would be terminating its provider agreement effective July 30 because it was not willing to accept the changes.
Minnesota Hospital Association President and CEO Lawrence Massa, Minnesota Department of Health Commissioner Ed Ehlinger, M.D., and Minnesota Attorney General Lori Swanson all went to bat for the small hospitals that cannot cover their costs through volume like big hospitals can.
An April 24 news release from the Minnesota Hospital Association states that President and CEO Lawrence Massa said that the change in payment methodology would put many small rural hospitals into “deep, deep red ink.”
Blue Cross stated that the changes affect about 50 rural hospitals across the state.
North Shore Hospital Administrator Kimber Wraalstad received a call from Blue Cross Blue Shield on May 1. She was told that Blue Cross would be delaying implementation until January 1, 2014. The company has agreed to help hospitals acquire the software needed to implement the new billing system and is willing to consider mitigation for facilities like North Shore Hospital that have low operating margins.
After initially not receiving a satisfactory response from Blue Cross, Wraalstad told the Cook County News-Herald on May 1 that Blue Cross seems ready to work with the hospital. “They are willing to have these conversations with us,” she said.
“This allows us to make sure we continue to have services for the community – both residents and visitors,” Wraalstad said. She said she believes having services available to people on Blue Cross insurance is important to Blue Cross as well.
A news release from Blue Cross Blue Shield of Minnesota addresses the issue from the insurance company’s perspective: “We want to assure you that Blue Cross remains absolutely committed to paying hospitals a fair market price for the important health care services they deliver in their communities every day. At the same time, there is a striking degree of randomness in the prices set by these hospitals. The level of variation that Blue Cross currently pays for common procedures – like appendectomies, CAT scans and knee replacements – can be in excess of 500 percent. This needs to change. It is why we are moving to a more transparent and less arbitrary system that pays providers based on the health needs of the individuals they treat and the resources needed for the complexity of different visits and procedures. This system is proven to be effective in containing health care costs and has been in use in other parts of the country for the past 20 years.
“We understand that moving away from the status quo can be challenging. But at a time when escalating hospital prices are of great concern to consumers and employers alike, we believe it’s important for us to move forward with these efforts. We remain committed to continuing our conversations with all hospitals on the need to address the affordability of care.”
North Shore Hospital Administrator Wraalstad told the hospital board that the new payment system does not outline specifically what Blue Cross would be paying for individual aspects of treatment, but it was clear that some sets of services would be reimbursed well below the hospital’s cost to provide the services. She also said that hospitals cannot compare their charges with other hospitals – this could be considered price-fixing and is illegal.
According to the Minnesota Hospital Association, Blue Cross has for decades been negotiating rates individually with small hospitals, paying a discounted rate from their normal charges.
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