Mission Health Delivers Notice of Intent to Terminate its Contracts with Blue Cross and Blue Shield of North Carolina

ASHEVILLE, N.C. (July 5, 2017) – Today, Mission Health announced it has delivered  notice of intent to terminate its contracts with Blue Cross and Blue Shield of North Carolina (BCBSNC) if ongoing negotiations fail to reach an agreement.  The notice establishes a specific deadline for new contracts to be in place by midnight October 4, 2017, or Mission Health and its facilities and physicians will be out of BCBSNC’s network effective October 5, 2017.

This decision was not made lightly.  Contracts with health insurance companies—like BCBSNC—greatly impact a health system’s long-term financial and operational sustainability.  Even more so with BCBSNC, which is the state’s largest health plan with 72 percent market share leaving little room for error.  Given the pending shift to Insurance-Company run Medicaid in North Carolina and the extraordinary Affordable Care Act repeal and replace discussions occurring in Washington, Mission Health must carefully evaluate its business relationship with BCBSNC to ensure the health system can continue providing affordable, high-quality care and remain financially viable for the long term.

To provide adequate time for collaboration with BCBSNC in reaching a new agreement, Mission Health began contract discussions nearly six months ago. Unfortunately, the health system isn’t any closer today to a contract resolution than when negotiations started. “BCBSNC’s latest proposal imposes effective payment rate reductions to our health system at a time when modest annual increases are more important than they have ever been,” said Charles Ayscue, Senior Vice President, Finance and Chief Financial Officer at Mission Health. “Even if we earn every dollar of pay for performance incentives offered by BCBSNC, we could at best get back to zero for three straight years. It’s simply impossible to keep up with rising medical supply, pharmaceutical, and other operating costs, let alone provide future wage increases to our fantastic team members without appropriate annual adjustments to our payment rates from BCBSNC in the coming years.”

Based on the complete lack of progress thus far, Mission Health provided BCBSNC a formal notice of intent to terminate its agreements, effective October 5, 2017. This notice means new agreements must be reached by midnight on October 4, 2017, in order for Mission Health to remain in the BCBSNC network. This was the most prudent decision for Mission Health and the patients the health system serves for a few key reasons, according to Ayscue:

  1. Mission Health is uniquely positioned as the region’s only safety net provider for all of western North Carolina. Our responsibilities go far beyond providing healthcare services to residents of this community, and we take that very seriously. A contract that puts Mission at risk, puts the entire community at risk.
  1. We have always been committed to strong financial stewardship. Mission Health is already significantly more efficient than most health systems in the state and nation, and yet we have taken the difficult steps of ongoing, aggressive cost reductions.  These have included making the extraordinarily difficult decisions to shrink our labor force and close specific service lines.  Between 2014 and 2018, Mission Health will have eliminated more than $240 million in costs, including $70 million in reductions in FY2017 alone.  Adding BCBSNC’s effective payment reductions to this already arduous task is simply not possible.
  1. Importantly, our notice of intent to terminate our contracts should not be a barrier, but rather bring needed focus to our discussions. It creates a deadline for resolution; at present, there is no incentive for BCBSNC to agree to adjust our payment rates because failure to do so would result in a contract renewals with a perpetual zero percent increase. Providing notice of our intent to terminate is a routine course of business between an insurance company and a provider during negotiations. However, if we are unable to come to an agreement with BCBSNC by October 5, 2017,  BCBSNC members will no longer have in-network access to Mission Health.

“The next few weeks may tell about BCBSNC’s intentions during the negotiations. Mission Health has agreed in principle to most of BCBSNC’s terms except for payment rates. We have embraced BCBSNC’s performance-based measures that pay us for quality and improved outcomes. We are committed to pay-for-performance because it means improved quality and efficiencies for our patients,” Ayscue said. “However, it is also true that these arrangements must be built on a foundation of fair payment rates from BCBSNC and a recognition that Mission already outperforms most health systems nationwide.  No other health system has ever been named a Top 15 Health System as we have between 2012-2017.”

Mission Health values it’s long-standing relationship with BCBSNC, and is committed to continuing good-faith negotiations to reach a new agreement. Mission Health will keep the community updated regularly on how the negotiations are progressing and how in-network access to Mission Health services may be impacted in the future.

 


Frequently Asked Questions


Q: What is happening between Mission Health and Blue Cross and Blue Shield of North Carolina (BCBSNC)?

A: Mission Health is currently negotiating with BCBSNC for new contracts that cover the services we provide to its members. On July 5, 2017, we issued BCBSNC a formal notice of intent to terminate our existing contracts. We did this because BCBSNC is not even considering baseline inflationary increases, which will not allow us to keep up with the rapidly rising medical supply, pharmaceutical costs, let alone providing wage increases for our valued team members. To help offset even inflation-based increases, we have offered repeatedly to explore transformational care models (including virtual care, admit to home, discharge to home, bundled payments, care management networks and more) without success. BCBSNC’s proposal is simply unsustainable and would place the health system at significant risk.

Q: When does the contract with BCBSNC end?

A: We are negotiating as a health system, on behalf of our facilities and physicians, and the contracts are set to expire at midnight on October 4, 2017. That’s why we began our contract discussions with BCBSNC nearly six months ago, to allow both organizations plenty of time to reach a new agreement. To our disappointment, BCBSNC pushed us off for months, wasting time we could have used to work in collaboration and make meaningful progress toward transformative care models and a new agreement. After engaging, they have offered nothing close to our input cost inflation rate and have not budged on their proposal.

Q: Are these negotiations necessary?

A: Negotiations with health plans are important for a variety of reasons, but most importantly, to ensure the financial sustainability of our health system which enables us to serve our community. Our contract with BCBSNC is by far our most significant payor agreement. As the region’s only safety net provider, we serve a higher population of patients insured by Medicare or Medicaid that reimburse us below costs; and we also serve a higher volume of uninsured patients than most health systems. Our commercial insurance contracts cover only a small portion of our population but represent our only ability to keep up with cost inflation that is out of our control.

Costs for medical supplies and pharmaceuticals continue to rise, as well as recruiting and retaining top talent, keeping our technology up to date and advancing treatment plans for our patients all represent significant costs. We are already and have been taking aggressive cost-cutting measures to reduce our expenses by more than $240 million 2014-2018. We simply cannot continue to cut our costs and take payment rate reductions from BCBSNC; it’s not sustainable.

Q: Which BCBSNC health insurance plans are affected by these negotiations?

A: We are currently negotiating with BCBSNC to renew our commercial and Medicare Advantage contracts. This includes employer-sponsored health plans, including the State Employees Health Plan, and health plans purchased on the Health Insurance Exchange.

It’s important to know that BCBSNC Medicare Supplemental plans (also known as MediGap health plans) are not impacted, as they are not contracted with our health system.

Q: Which Mission Health facilities are affected by the negotiations?

A: Our current negotiations with BCBSNC affect the following facilities and affiliated providers:

  • Mission Hospital Memorial Campus
  • Mission Hospital St. Joseph Campus
  • Angel Medical Center
  • Blue Ridge Regional Hospital
  • CarePartners
  • Highlands-Cashiers Hospital
  • McDowell Hospital
  • Transylvania Regional Hospital

Q: Are physicians impacted by the negotiations?

A: Yes. Mission employed and contracted physicians are part of the negotiations. There is, however, one exception, which is our anesthesiologists. Those agreements are not impacted by our negotiations.

Q: What does this mean for BCBSNC members?

A: There are no immediate changes for BCBSNC members. BCBSNC patients may continue to receive care at our facilities and with our physicians the same way they always have. BCBSNC members’ in-network access will only change if we are unable to reach a new agreement with BCBSNC by midnight on October 4, 2017. If this happens, Mission will be removed from BCBSNC’s provider network and its members will still have access Mission’s physicians, hospitals and other providers, though there may be different payment terms. There are special arrangements that will be made for emergency patients (always in-network) and patients in care transitions (for example: pregnant women).

Q: Will BCBSNC patients be notified of the negotiation or kept informed?

A: Yes. Letters will be mailed to our patients with BCBSNC health plans in the coming days. We are also providing notification to employers who offer BCBSNC health insurance plans, insurance brokers and benefits consultants. It’s important that our community is fully aware of what’s happening and understand how their access to care may be significantly impacted in the future. Additionally, many employers are preparing for open enrollment, and we want to ensure they are aware that Mission physicians, facilities and related service providers may not be included in the BCBSNC network for the 2018 benefit year.

Q: What if a patient is hospitalized, pregnant or receiving treatment for a special condition after October 4, 2017?

A: Certain patients, including those hospitalized, in their second or third trimester of pregnancy, or undergoing a course of treatment, may be able to receive care for a limited time as part of the Continuity of Care transitional period. The length of the transitional period depends on the specific health plan. Patients should call the phone number on the back of their BCBSNC insurance card to find out if they are eligible and apply.

Q: What is Continuity of Care, and how do I know if I qualify from BCBSNC?

A: Continuity of care is a process that allows current BCBSNC members to continue receiving care from an out-of-network provider for ongoing special conditions.

If your PCP or specialist is out of network with BCBSNC and they are currently treating you for an ongoing special condition that meets BCBSNC continuity of care criteria, BCBSNC will notify you 30 days before the contract end date (October 5, 2017). If you do receive a letter from BCBSNC, it’s important to respond to BCBSNC within the time frame noted in the letter.

To be eligible for continuity of care, the patient must be actively being seen by the out-of-network provider, including hospital services) for an ongoing special condition and the provider must agree to abide by the BCBSNC requirements for continuity of care.

» An ongoing special condition means:

  • In the case of an acute illness, a condition that is serious enough to require medical care or treatment to avoid a reasonable possibility of death or permanent harm;
  • In the case of a chronic illness or condition, a disease or condition that is life-threatening, degenerative, or disabling, and requires medical care or treatment over a prolonged period of time;
  • In the case of pregnancy, the second and third trimesters of pregnancy;
  • In the case of a terminal illness, an individual has a medical prognosis that the member’s life expectancy is six months or

» The allowed transitional period extends up to 90 days, except in the cases of:

  • Scheduled surgery, organ transplantation, or in-patient care, which shall extend through the date of discharge and post-discharge follow-­up care or other inpatient care occurring within 90 days of the date of discharge;
  • Second-trimester pregnancy, which shall extend through the provision of postpartum care; and
  • Terminal illness, which shall extend through the remainder of the individual’s life with respect to care directly related to the treatment of the terminal

If available, patients should speak to their employer to see if there are Continuity of Care exceptions that may be available. Otherwise, patients should call the phone number on the back of their BCBSNC insurance card to find out if they are eligible and apply for Continuity of Care.

Q: What if a patient has an emergency after October 4, 2017, and Mission Health is out of network?

A: Patients will always have access to our emergency rooms, regardless of our contract status with BCBSNC. If a patient experiences a medical emergency, they should always visit the nearest emergency room. Patients are entitled to in-network emergency care at any hospital until they are stabilized. Once stable, the patient will have a choice to either continue care with our hospital, or be transferred to a facility that is in-network with their health insurance plan.

Q: How will I know if the negotiations are progressing?

A: We will continue to provide updates on the status of our negotiations and let you know if anything changes that would affect our health system or the patients we serve.


 

ABOUT MISSION HEALTH

Mission Health, based in Asheville, North Carolina, is the state’s sixth-largest health system. For the fifth time in the past six years, Mission Health has been named one of the nation’s Top 15 Health Systems by Truven Health Analytics, an IBM Company and part of IBM Watson Health in 2017. We are the only health system in North Carolina to achieve this recognition. Mission Health operates six hospitals, numerous outpatient and surgery centers, post-acute care provider CarePartners, long-term acute care provider Asheville Specialty Hospital, and the region’s only dedicated Level II trauma center. With approximately 12,000 team members and 2,000 volunteers, Mission Health is dedicated to improving the health and wellness of the people of western North Carolina. For more information, please visit mission-health.org or @MissionHealthNC.