Insurer, Tacoma health system face off over medical costs. Here’s what’s at stake
Area patients insured by Regence BlueShield might need to seek providers outside Tacoma-based MultiCare health system if negotiations do not resolve a current financial standoff.
Regence, in a blog post on its site published Jan. 23, stated that MultiCare’s leaders issued a contract termination “to demand a double-digit increase in addition to the increase in rates they already agreed to.”
The message was part of a notification requirement for its members within 30 days of any potential provider termination, including the blog post and letters sent to members.
Patients are caught in the middle, with estimates in the “hundreds of thousands” of people affected, according to the insurer.
Regence serves more than more than 3.4 million people through its four-state operations. Each Regence health plan is a nonprofit independent licensee of the Blue Cross and Blue Shield Association.
Regence BlueShield, its health plan in Washington, serves more than 1.4 million people.
If a resolution is not reached by March 1, the following MultiCare hospitals in the Tacoma/Pierce County area would be out of network for those covered by Regence “for all line of business, including Medicare Advantage,” according to the insurer: Allenmore, Tacoma General, Good Samaritan, Mary Bridge Children’s as well as Deaconess Hospital in Spokane, Valley Hospital in Spokane Valley, Covington Medical Center and Auburn Medical Center.
Other affected entities would include MultiCare Medical Associates primary care and specialty clinics, Rockwood Clinic primary care in Spokane, specialty clinics and Indigo Urgent Care.
Capital Medical Center in Olympia and Yakima Valley Hospital are not affected by the current contract impasse.
MultiCare, in a statement, told The News Tribune via email, “The health care industry is facing economic challenges, and we are looking to our valued partners to develop a shared response.”
“Regence and MultiCare share the objective of renewing our agreement and have been talking for months about the best way to do that,” it noted. “We agree that Regence members should have access to MultiCare services to meet their health care needs.”
How we got here
Zak Ramadan-Jradi, vice president of network management for Regence across Washington, Oregon, Utah and Idaho, offered further details in an interview Wednesday, Jan. 24, with The News Tribune.
Prior to working with Regence, Ramadan-Jradi was with MultiCare as executive director and vice president of accountable care.
He said that late last year, MultiCare “communicated to us their intent to terminate the contract.”
“Normally, we do not negotiate a multi-year contract in midstream,” he added, with the contract set to run through December 2024.
The call for termination was to invoke negotiations for new rates. In its release, Regence offered some examples:
▪ Total cost of having a baby delivered increasing by $3,000-$4,000.
▪ Heart bypass increasing $19,000 – “about three times the health insurance premium that an average employee pays a year through their employer.”
Ramadan-Jradi described it as an effort to “reopen the contract to help compensate for any shortfall they have in the balance sheet.”
MultiCare, in its statement Jan. 24, noted that “the rate of inflation as well as health care staffing costs have increased substantially over the past three years, and costs continue to rise due to labor shortages, drug prices and other factors.”
The financial-headwinds topic has been revisited repeatedly by area health leaders, including Multicare’s CEO Bill Robertson. Last March, officials including Robertson warned of unsustainable balance sheets following 2022’s financial performance, with revenue not keeping up with costs.
Ramadan-Jradi noted other health organizations are facing similar, post-pandemic challenges with staffing, the end of federal pandemic aid, supply management and inadequate Medicaid/Medicare reimbursement rates, among other issues.
Regence BlueShield noted in separate bullet points emailed to The News Tribune, “It is not unusual now for us to see demands for increases between 15% and 25%.”
It added that “members and customers should not have to shoulder the costs of provider system operational inefficiencies and self-inflicted wounds through increased premiums and out-of-pocket expenses.”
Termination instead of conversation
Against that financial backdrop, Ramadan-Jradi said that what used to be ongoing, lengthy discussions between insurers and providers now become simply termination calls on contracts.
“The termination becomes the phone call. Instead of making a phone call to say, ‘We need to have a conversation,’ you get the termination,” he said
MultiCare said it was “working with Regence to agree on reimbursement rates that reasonably and sustainably address the cost of providing care.”
“It’s really important for our membership to know that everything we are doing today is really the result of us lobbying on their behalf to keep the cost very low,” Ramadan-Jradi said. “And to really engage a provider to come to the table.
“And MultiCare is at the table,” he added.
Ramadan-Jradi said this might not be the last standoff between the insurer and a health system, predicting, “we’re going to be living with these dynamics for at least the next year or two.”
“It is absolutely feasible that down the road, we’re going to see another one coming up,” he said, referring to contract terminations, adding that Regence is in conversations “with many delivery systems across the state on a daily basis.”
“These might go really well and everybody will be nice and happy, or actually it could be a disruption,” he said.
MultiCare noted it had “extended the deadline while we finalize the terms of our 2024 agreement and will continue to work with Regence to resolve our contract without disruption to our patients.”
Regence BlueShield for now is recommending its members call its Customer Service team at the number provided on the back of their member ID cards.
Member account access and information on in-network providers also are available at regence.com.
This story was originally published January 25, 2024 at 5:30 AM.
