Payer and Provider Do Battle in Texas

[Greenbeard]

An interesting look at a power struggle between an insurance company and a hospital system in North Texas. Not an isolated incident but they're really airing their dirty laundry in public on this one.

Blue Cross Blue Shield, Texas Health Resources dispute may raise costs for Texas patients:

Instead of cooperating, the region's largest insurer and hospital system are taking jabs at each other.

Blue Cross says Texas Health is demanding an additional $120 million over three years to cover cost increases. The insurer has declined to say how much it is currently paying Texas Health.

The insurer says it contributes $178 million to Texas Health's annual profits. It also says the hospital system makes a 30 percent profit margin from Blue Cross members.

"This kind of runaway spending on medical care is one of the main causes of higher health insurance premiums for our members," Blue Cross said in a recent letter to members.

For its part, Texas Health says Blue Cross wants to pay its millions upfront in a lump sum. Instead, Texas Health wants its money reimbursed traditionally, after a claim is filed. The hospital system also points to the insurer's accumulated wealth.

"Blue Cross Blue Shield of Texas is sitting with about $7 billion in reserves. And they don't provide any patient care," said Wendell Watson, spokesman for Texas Health. "In fact for many of their customers – the self-insured ones – they don't do much more than manage the paperwork on claims."

Both are nonprofit companies. Texas Health had $2 billion in assets at the end of 2008, according to its latest financial reports.

The power struggle between insurers and hospitals has intensified in recent years as hospital consolidations created mega-health systems. These companies, emboldened with leverage, began going head-to-head with insurance companies for better rates.

"As we've grown we've gained a larger network of providers that provide care in a variety of settings," said Barclay Berdan, Texas Health's vice president for system alignment. "We get some economies of scale because of that."

Blue Cross' vice president for network management, Shannon Stansbury, said the company negotiates with smaller health providers across the state every day. Blue Cross has contracts with more than 400 hospitals in the state. [...]

 

[Greenbeard]

Yesterday the Dallas Morning News published short interviews shedding some light on the perspectives of the players here. The interviews are of the President of Blue Cross Blue Shield of Texas and the chief executive of Texas Health Resources. Not necessarily full of surprises, though both agree on the need for payment reform to reward value, and it's interesting that the head of the provider network is much quicker to point fingers at the insurer than vice versa.

 

[SmarterThanHick]

Citing hospitals make 30% overhead doesn't really help their cause. Insurance companies make money on pushing paper. Hospitals save lives. Guess who deserves more profit.

 

[Care4all]

these are BOTH supposedly Non Profit Companies, no?