Several rural hospitals say that Blue Cross Blue Shield of Texas is using its influence to negotiate unfavorable contracts that slashed reimbursement rates from the insurance company, according to the Texas Observer.
The piece features Iraan General Hospital in West Texas, who was already losing over a million dollars a year before new CEO Keith Butler took over and received a new contract from Blue Cross, whose reimbursement provides most of the hospital’s revenue. “I pulled it up and started looking at the contract,” Butler told the Observer. “It was terrible. It would have hurt this hospital a lot.”
Butler sent back a counteroffer, and didn’t hear back from Blue Cross until the insurance giant sent letters to customers (including hospital employees) saying Iraan General may become out of network, forcing residents to travel dozens of miles for in network hospital care. Butler said the letters were sent to pressure the hospital into accepting the new agreement. “But had I signed that original contract, the hospital would have been damaged to the point of failure,” Butler told the Observer.
Blue Cross Blue Shield of Texas emailed a statement to the Observer noting that renegotiations “needed to be updated to include new protections for members and employers,” and that the company “continues to negotiate in good faith with a group of rural hospitals across the state.”
Iraan is one of several hospitals to say they struggled with similar issues. Antitrust laws say rural hospitals are not allowed to collectively bargain with insurance companies, and their administrators often have less experience in negotiating contracts than larger systems. In addition, a report from Episcopal Health says that there are 75 rural hospitals at risk of closing. Meanwhile, Blue Cross earned $1.3 billion net profit after $32.6 billion of revenue in 2017 after earning just $106 million net profit on $30.3 billion of revenue in 2016.
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