Cash-strapped rural hospitals accuse BCBS of Texas of 'strongarm' tactics

Rural hospitals are questioning Blue Cross Blue Shield of Texas' use of "strongarm" tactics to negotiate lower rates, according to the Observer.

Here are five things to know:

1. Across Texas, BCBS of Texas is sending several rural hospitals low reimbursement rates and then notifying customers about failed contract negotiations when hospitals don't agree to those rates, John Henderson, CEO of the Texas Organization of Community and Rural Hospitals, told the Observer. This often forces hospitals to choose between protecting their bottom line or ensuring patients maintain in-network access to their facility.

2. For example, Keith Butler, the interim CEO of Iraan (Texas) General Hospital, said he received a letter from BCBS — the hospital's largest source of revenue — in spring 2018 requesting a contract renegotiation. Mr. Butler said the insurer's proposed reimbursement cuts for outpatient clinic visits and emergency room services would have hurt the hospital, which had been bleeding more than $1 million a year since 2017.

3. When Mr. Butler sent BCBS of Texas a counteroffer, he told the Observer the health insurer went quiet for nearly three months. Then, BCBS began notifying customers and hospital employees that a snag in contract negotiations would push Iraan General Hospital out of BCBS of Texas' network.

4. While Mr. Butler ultimately agreed to a slightly better contract than the first offer, he projects the hospital will lose "hundreds of thousands" on laboratory tests alone. The new contract "will take a significant hit on our bottom line," he said.

5. BCBS of Texas has a quarter of the health insurance market in Texas. In a statement to the Observer, the health insurer said it is renegotiating outdated contracts with several rural hospitals. The insurer said the contracts "needed to be updated to include new protections for members and employers." BCBS added it "continues to negotiate in good faith with a group of rural hospitals across the state."

For the full Observer article, click here.

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