Texas Health, Blue Cross Blue Shield of Texas Agree on Contract Rates, But One Hurdle Remains

Texas Health Resources and Blue Cross Blue Shield of Texas have agreed upon the financial details on a contract extension that would keep the Arlington system’s hospitals and affiliated physicians in-network through 2018, but a 90-day exit clause requested by Texas Health is keeping the insurance giant from signing.

The news comes after two weeks of negotiations that appeared to be going nowhere fast—Texas Health, the region’s largest health system by market share, requested a $56 million price increase, which Blue Cross balked at. THR also wanted the insurer to include its new network with UT Southwestern, Southwestern Health Resources. Blue Cross currently has separate contracts with Texas Health and the affiliated UT physicians that make up that network.

And so the two appeared to be in a stalemate, and Texas Health embarked on an advertising campaign that called out the insurer in full page ads in The Dallas Morning News and the Fort Worth Star-Telegram. After the holiday, however, the two made significant progress, and reached “mutually agreeable terms about rates,” according to BCBSTX market president Dr. Paul Hain. (Neither agreed to elaborate about what those terms were.)

The only remaining piece, both parties say, is the exit clause.

“We have a 90-day termination clause in our current contract with Blue Cross,” read a statement from Texas Health CEO Barclay Berdan. “We’ve asked for the same thing in this new contract. This kind of clause is also common in other contracts of ours and throughout the industry, though rarely if ever used. We have never exercised a term, but the clause is needed because it’s the only protection we have from the arbitrary and capricious behavior Blue Cross has already demonstrated in these negotiations.”

Counters Hain: “Our philosophy is, you’ve taken out full page ads and scared our members, so why would we allow you to (exit) immediately? Essentially, they could sign it today and exercise their out clause in 90 days. … Literally the entire thing has been agreed to and hands have been shaken. We say both sides need to agree to honor the beginning of 2018 and they don’t want to say that.”

The contract expires on December 31. Stay tuned. Below is Berdan’s full statement:

We’re once again disappointed but not surprised by these kinds of last-second negotiating tactics by Blue Cross. Patients and providers are in this situation because Blue Cross deliberately delayed substantively negotiating until the last weeks before our contract expired. Now they’ve brought the progress we thought we had made to a halt.

We have a 90-day termination clause in our current contract with Blue Cross. We’ve asked for the same thing in this new contract. This kind of clause is also common in other contracts of ours and throughout the industry, though rarely if ever used. We have never exercised a term, but the clause is needed because it’s the only protection we have from the arbitrary and capricious behavior Blue Cross has already demonstrated in these negotiations. And their non-compliance with all of the terms of the current contract is even more reason to have this protection.

They’ve raised this issue at the last minute, with no good explanation. It comes across as an attempt to bully us into an agreement. We refuse to be bullied into an agreement that doesn’t make sense for us or our patients.

We’ve agreed on all other points. This is the only issue that remains.

Blue Cross is threatening to keep Texas Health out of their network, which would disrupt care for hundreds of thousands of North Texans, because of this one issue.

Patients and providers are in this situation because Blue Cross intentionally delayed substantively negotiating with us until weeks before our contract expired. They did this after representing to clients, employers and DFW residents that Texas Health was in-network when people went through open enrollment earlier this fall. They did this knowing that they did not have a contract with us after Dec. 31, nor were they negotiating one.

We have offered several options to resolve this one final point, but they have not responded in a reasonable manner and appear to be comfortable disrupting patients and employers during this holiday time.”