Checking In On the Blue Cross Blue Shield, Texas Health Resources Contracting Impasse

More than a week has passed since the formal impasse between Texas Health Resources and Blue Cross Blue Shield of Texas began, which risks the hospital system with the largest market share in North Texas being out of network on the state’s largest insurance plan. And, in speaking to both sides, neither appear any closer to settling the dispute, which is reportedly over a $57 million increase requested by Texas Health. The system maintains that it’s “nominal” considering it provides more than $1 billion in services each year. Blue Cross says it’s about a 5 percent rate increase, and it’s not going for it. So here we are.

In a message to its clients, Blue Cross said that the amount “could cost our large employers between $1.5 and $2 million.” Talks are still happening, but the Dec. 31 deadline is coming fast: “Chances are pretty slim at this point, but we’ll continue to talk as long as they’re willing to talk,” said Blue Cross spokesman Chris Callahan.

Texas Health sent a long statement immediately after, but has set about addressing claims from Blue Cross internally, in messaging acquired by D Healthcare Daily. Blue Cross has laid out its side in communications with its clients, arguing that it’s standing up for their balance sheets—most of its clients are self-insured.

But what’s at stake, according to THR, is “significant disruptions and inconveniences” for both physicians and patients. Citing “projections of available bed capacity,” CEO Barclay Berdan wrote that “almost 90 percent of current Texas Health behavioral health patients insured by Blue Cross will not be able to find an in-network hospital with dedicated behavioral health beds near their homes.” The internal message says that “more than three in 10 pregnant women with Blue Cross will have difficulty finding an in-network hospital close to their home,” and “close to half of patients with surgical or medical needs won’t have an available bed at an in-network hospital close by.”

Blue Cross says this is why the company emphasizes continuity of care policies, and is asking policy holders to dial the number on the back of their card to see if they qualify to continue receiving care at Texas Health facilities despite being out of network. This applies to pregnant women, those suffering from life-threatening illnesses, as well as some acute and chronic conditions.

We hope Texas Health will work with us so we can continue to offer their doctors and facilities to our members,” read a statement sent over Monday afternoon from Blue Cross. “If Texas Health does decide to leave our networks, North Texas members can still access more than 25,000 in-network doctors and 60 in-network hospitals.”

Here are the full messages from each side, starting with Texas Health:

Because you’re an important member of the Texas Health Resources family, I’m writing to update you about our efforts to extend our current contract with Blue Cross Blue Shield of Texas (BCBSTX) and to correct the misinformation they are spreading.

Texas Health originally approached BCBSTX, starting in the spring of 2016, to discuss a new contract through Southwestern Health Resources, the integrated network we’ve formed with UT Southwestern. Sadly, BCBSTX ignored our repeated efforts to engage them in a dialogue.

In mid-October, after a summer of silence, leaders at BCBSTX agreed to meet with UT Southwestern President Dan Podolsky, M.D., and me to discuss a contract with Southwestern Health Resources. During that meeting we discussed extending the Texas Health contract through 2017. This would allow time to work on an SWHR contract without disruptions for patients, physicians and employers. In subsequent communications, their offer to extend fell short of our needs, and proved to be a “take it or leave it” position that was not negotiable. I declined their terms on Dec. 5.

With less than three weeks remaining in the existing contract, we are not close to a new agreement. As a result, Texas Health’s vast network of hospitals, outpatient facilities, freestanding ERs and Texas Health Physicians Group face the possibility of being forced out of BCBSTX’s network beginning Jan. 1, 2017.

We’re deeply disappointed by the staggering consequences their decision not to negotiate with us will have on North Texas families. There will also be significant disruptions and inconveniences for physicians who will now have to admit and treat at other facilities, work with unfamiliar nursing staff, work to secure block OR time, and refer to patient histories and conditions without access to their electronic medical record and order sets. Projections of available bed capacity show that:

·         Almost 90 percent of current Texas Health behavioral health patients insured by Blue Cross will not be able to find an in-network hospital with dedicated behavioral health beds near their homes.

·         More than 3 in 10 pregnant women with Blue Cross will have difficulty finding an in-network hospital close to home to deliver their babies.

·         Close to half of patients with surgical or medical needs won’t have an available bed at an in-network hospital close by.

·         More than 4 in 10 new parents will have to transfer their sick newborn babies across town to find neonatal intensive care.

I have an obligation to clear up what is being said as part of BCBSTX’s misinformation campaign, but there are so many items, it requires two sheets of paper. Please refer to the document here.

We remain committed to reaching an agreement with BCBSTX before the end of 2016 regarding a contract extension. This will allow us to continue providing the high-quality, compassionate care for which we are well known. BCBSTX needs to make a similar commitment on behalf of their customers, who expected Texas Health to be in-network when they enrolled for benefits in 2017. Otherwise, BCBSTX is solely responsible for the massive disruption that patients will experience effective Jan. 1, 2017.

What now for patients

We hope, and expect, to reach an agreement with BCBSTX on our proposed extension. However, if the insurer declines our proposed extension, we want to make you aware of what options patients will have, so you can be prepared to discuss them in case you receive questions.

Ø  Continuity of Care: Some patients may qualify for Continuity-of-Care benefits, which would temporarily extend in-network access to our providers and facilities. Patients currently in a course of treatment, or women in their second or third trimester are encouraged apply for Continuity of Care. To see if they qualify, patients can initiate the process by calling the customer service number on the back of their insurance card.

Ø  Our Emergency Room is Always Open. Even if we are not in-network, our Emergency Rooms are open to all patients, and the cost for emergency services is not impacted based on a patient’s network status.

Ø  Consider other Health Plans. Texas Health is in-network with the vast majority of major health plans in our region. Patients can see a full list of the health plans we participate in by searching for “insurance” on our website at, or calling us directly at (855) 246-7379.

Ø  Accessing Texas Health Out-of-Network. Patients can still choose to receive care from our providers, by using their out-of-network benefits. Patients may incur additional costs.  We urge patients to call the customer service number on the back of their insurance card to understand the specifics of their plan and how much their upcoming procedure/appointment will cost if they are out-of-network.

BCBSTX members who are concerned about their in-network coverage should call the customer service number located on the back of their insurance card (1-800-521-2227). For general comments or to express support for Texas Health, visit

Thank you for your continued support and commitment to serving patients that rely on Texas Health for their care.

And what Blue Cross sent its clients:

We want to provide you a brief update on our ongoing discussions with Texas Health Resources and Texas Health Physicians Group (Texas Health).

As you may know, our contracts with Texas Health will expire at the end of this year. Unless we agree on extensions to our current contracts very soon, Texas Health will no longer be part of our provider networks as of Jan. 1, 2017.

In aggregate, Texas Health Resources is currently the most expensive health care provider in North Texas. They have used numerous key acquisitions to gain the leverage necessary to command higher reimbursement rates without additional benefit. Since 2012, Texas Health’s acquisitions have cost Blue Cross and Blue Shield of Texas (BCBSTX), employers and members more than half a billion dollars.

In July, we sent Texas Health a proposal to initiate contract negotiations. Texas Health chose not to respond to us until November, leaving very little time to negotiate.

Since we value our relationship with Texas Health and want them to continue to be in our networks, we offered Texas Health the opportunity to extend their current contracts for one year. That would allow additional time to negotiate longer-term contracts while remaining in-network at the current reimbursement rates.

Unfortunately, Texas Health rejected our offer and countered by proposing new short-term contracts with egregious rate increases that would cause our members to bear the burden of additional unnecessary costs with no guarantee of better health outcomes.

The excessive rate increases Texas Health has proposed would raise member costs by approximately $57 million. Our analysis also shows the increase could cost our large employers between $1.5 and 2 million. This is unacceptable. In order to continue offering affordable and sustainable health plan options, we must hold the line on demands for unreasonable reimbursement rates.

As a customer-owned health insurance industry leader in Texas for more than 80 years, we are committed to advocating on behalf of our clients and members for high-quality, cost-effective health care. It is an obligation we take very seriously.

If your goals align with ours, we would like to thank you for your support.

Our focus now is on minimizing the impact Texas Health leaving our networks will have on our members. We are working with doctors in the area to transition our members to other hospitals and facilities in the network.  We understand changing to another doctor can be difficult. We are here to help members through this process.  Members who are planning to undergo a surgery or procedure or who would like to know their options for in-network care can visit our Provider Finder® to locate a new provider in the area. Members can also register for or log in to Blue Access for MembersSM for personalized search results based on their health plan and network.

In general, continuity of care benefits are available for members affected by a provider leaving our network, when the treating doctor or provider reasonably believes that discontinuing care could cause harm. Members can call the number on their member ID card and one of our customer advocates will address their specific questions and help them with filing a continuity of care request form, if the service applies to their specific benefit plan.

Posted in Insurance/Benefits, News.