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Mission, Blue Cross each tout ‘options’
Monday, 04 September 2017 16:00
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A high-ranking official from each side shared his views on the contract standoff between Blue Cross Blue Shield North Carolina and Mission Health System — and sometimes threw verbal punches — on Aug. 4 during an issues forum of the Council of Independent Business Owners.

In essence, the two speakers said other alternatives are available to their respective counterpart for medical care or medical insurance. About 100 people attended the meeting at UNC Asheville’s Sherrill Center.

Their reassurances were aimed at the thousands of Western North Carolina residents with Blue Cross insurance who face worries — if the dispute is not resolved — of having to pay higher, out-of-network rates for care at Mission.

Steve Crist, BCBSNC’s vice president of the company’s group markets, spoke for 12 minutes

Jon Yeatman, Mission’s chief strategy officer and an Asheville native, spoke for about 20 minutes. 

An 18-minute question-and-answer session followed after both speakers had given their addresses.

Crist began by noting that “many of you are customers of ours, so I’d like to say ‘thank you’ for your business.”

He added that is was “unfortunate” that Mission has terminated its contract with BCBSNC, effective Oct. 5.

“We’re not here to win a PR (public relations) battle,” Crist said. “If there is any fight to be won, however, it’s the fight to control health care costs.

“There are several lenses to examine health care. First,” he said, there is “the lens of health care costs. As business-owners and leaders, you know health-care costs are second behind business payroll and inventory....

“Blue Cross has been here 84 years. We’re the only health-care company serving all 100 North Carolina counties,” Crist noted.

“Twenty-five-thousand members enjoy ACA (Affordable Care Act) coverage in this area alone, with 500,000 (clients) across the state.

“We’re also heavily regulated. You might say... ‘So what?’” Crist asserted.

“So 85 percent of our” business is out of its decision-making hands, he said. “So Blue Cross has averaged less than 1 percent profit margins.”

As for how BCBSNC and Mission reached an impasse, Crist said, “This contract came up for renewal on Aug. 1, 2017.”

He added that Blue Cross needs “to  stop paying for volume and start paying for value.”

Crist stressed that his company is “seeking better care outcomes — and less duplication.”

In an apparent jab at Yeatman, Crist then noted that “Mission — and this administration — has refused to move forward with this contract. Instead, it has issued a termination notice... A termination notice, to us, is not the beginning of negotiations, but rather, it’s the end of a negotiation.”

With a smile, Crist said Mission’s offer to keep talking “is as if a spouse serves divorce papers — and then is asked to go to marriage counseling.”

“Of all of our employer accounts in this western part of the state, 73 percent of the payment that goes to Mission is from self-administered employers.

“While it’s fun” to disparage “the big, bad insurance company, you’re not ‘sticking it’ to us (BCBSNC).” Indeed, Crist contended, by its actions, Mission is “‘sticking it’ to the self-funded local businesses.”

Regarding its contract with Mission, BCBSNC “brought seniors into the discussion because they (Mission) canceled Medicare portion of the contract, too.

“What happens next?” Crist, asked, rhetorically. 

He then answered his question by asserting that “there are 260,000 members in WNC who are impacted by this decision. We are taking this very seriously. Folks, we only have 90 days to bring calm to the situation, so that there can be a continuation of care.”

Crist added, “Here’s our plan — on July 31, we sent out an awareness letter...” Next, BCBSNC will contact those undergoing an “active course of treatment... All of these are fantastic examples, where we do not want to disrupt care...

“Yesterday alone, we had 327,000 contacts. We are ready to go on this discussion” — either to resolve the situation with Mission” or to move on.

“We are encouraged by what’s happening outside the Mission Health” network in WNC.

He said most of the claims Blue Cross paid in WNC over the last year went to providers that are not affiliated with Mission.

“We are encouraged by the access that remains outside of the Mission Health system,” Crist said.

He listed four areas of care — family medicine, radiology in a free-standing clinic, cardiovascular disease and orthopedic surgery – in which providers other than Mission accounted for more than half the dollars in claims that BCBSNC paid in 16 WNC counties.

“The reason why I bring this up is simple. I was troubled by the article in the (Asheville) Citizen-Times on Sunday” that likened the Mission-BCBSNC negotiations “as nothing more than a battle between your local cable provider and premium channels.”

Crist then said, “So Mission will be ‘out of network.’ So for those folks who can’t go to another specialist, we understand. The health plan simply reflects that Mission costs more than the in-network provider.

“I will close by saying this is a very serious issue. We are here for our patients and for Western North Carolina.”

Mission’s Yeatman began by noting that “I’ve been in health care for 15 years, including six at Mission — and I’ve never done this before,” referring to the impasse with Blue Cross.

“This is not where Mission typically spends its time. Our 12,000 employees at Mission spend 24 hours a day, seven days a week,” caring for its patients. “More than 105,000 people come into our emergency department. So we spend our time — 95 percent of it — providing health care services... We’re the only children’s hospital in the area. And the list goes on and on.

“On a more personal level, that’s why I came back to Asheville. When I say ‘back,’ I mean I was born in Memorial Hospital. My parents lived on a dirt road in Arden”— and later divorced. 

Despite the challenges, Yeatman earned an MBA at The Wharton School of the University of Pennsylvania, with a concentration in health care management, and a bachelor’s degree at Georgetown University, with a major in finance. Yeatman noted that he is an active member of the Asheville community and enjoys spending time with his wife and two children.

“When Dr. Ron Paulus (Mission’s president and chief executive officer) came here about seven years ago, I was the second person he hired. I love Asheville. I always was in awe of Memorial Hospital. It’s more than a job for me.” (Mission is North Carolina’s largest private employer west of Charlotte.)

At that point, Yeatman said, “There are three points I’m hoping to communicate effectively today” as follows:

• “Our request is reasonable, responsible and essential.

• “Blue Cross has created a credibility challenge.

• “They (BCBSNC) told us (Mission) this morning that they aren’t going to negotiate further with us.

“The good news is you” have other options besides Blue Cross, Yeatman said.

Speaking generally, he added that Mission is under constant pressure to make ends meet because “WNC is older, sicker and poorer than the rest of the state.”

Regarding its current contract with Blue Cross, Yeatman said, “We’re paid below actual costs for three-quarters of our actual customers.

“We’ve also seen a $20 million increase in our charity cases. So the net result in 2016 our entire operating margin was $24 million.  Mission started fiscal 2016 at $84 million worse off... That’s the math problem.

“We are locally owned. We’re the only locally owned health care system left in Western North Carolina.

“Under Dr. Paulus, Mission has made it a priority to make sure our house is in (financial) order. Our cost per customer is $1,200 lower than our benchmark peer group.”

In a jab at BCBSNC, Yeatman said, “Blue Cross sometimes talks about ‘cost-sharing,’but he wondered how “being paid below cost by Blue Cross” can be called “sharing.”

What’s more, Yeatman said, “Because of our relentless focus on cost-cutting…. Mission’s loss is only 2.5 cents on the dollar – lower than both our for-profit and nonprofit peers.”

He also noted that Mission has been named one of the top 15 health systems in the country. “We’re in the top 1 percent nationally” — and “this is the No. 1 hospital in North Carolina for heart attack survival. We’ve been (named) a top 50 cardiovascual hospital” numerous times.

“Despite all of that, we actually have lower prices... 23 percent lower than state averages and 18 percent lower than national averages.

“In a normal business, the ‘game’ is over because people just choose you. But in the health care system, there is nothing normal,” Yeatman said.

Even “with a mid-single-digit payment increase (by Blue Cross), there would be cuts” by Mission, he said.

Yeatman then charged that “Blue Cross, through no fault of Mission, has created a credibility challenge. Blue Cross’ court argument” contends “that Mission is already too expensive. So the increase it’s seeking is” going to make Mission even more expensive.

However, he noted that, ironically, Blue Cross, which awards hospitals for excellence, “has awarded Mission for its care in several categories” through the years.

As Yeatman was listing Mission’s high rankings and awards, meeting attendee Tom Van Slambrouck interjected, “Some of those aren’t very relevant when you have people who can’t even afford your services.”

In response, Yeatman said Mission’s prices are competitive with its peers.

Also, he said, “If Blue Cross intends for Mission to not have a rate increase, then they clearly would expect you not to have a rate increase. But Blue Cross is raising rates 14 percent… According to Blue Cross, they’ve already asked you for rate increases... Blue Cross did earn a 13 percent margin in the first quarter.”

Yeatman then said, “None of that means Blue Cross has to agree (with Mission). With more than 73 percent market share, Blue Cross completely dominates its field in the state.”

 In contrast, Yeatman said of Mission, “We’re big, but we’re only 5 percent of their market share in North Carolina.”

Yeatman also cited a recent statement by an unidentified BCBSNC spokesman contending that the annual percentage increase in the rates Blue Cross charges employers has been in the mid-single digits this year.

“I may not be that great at math, but it seems like there’s some extra money somewhere,” Yeatman said.

(Crist earlier had attributed at least a portion of the change in Blue Cross rates to higher costs for prescriptions and increased use of services.)

On another point, Yeatman noted, “Blue Cross said we issued a ‘notice of termination.’ We did it because Blue Cross” failed to budge off its offer of no rate increase during months of talks. “We spent months negotiating in good faith. There was no movement. So we faced a choice between facing an uncertain fight or making catastrophic cuts... It’s their policy and their choice... We will resume negotiations (with Blue Cross) anywhere and any time.”

On a kinder note to his Blue Cross counterpart, Yeatman said, “I appreciate that they have” one of the company’s top officials — Crist — at the CIBO meeting.

Despite the Mission-BCBSNC clash, “You don’t have to agree with Mission or Blue Cross. You could turn to the market. As you’ve seen, we’ve recently signed contracts with Aetna and Signa. The market has weighed in and agrees that Mission provides good service at good rates.

“We like good partners. Both Signa and Aetna are convinced that their arrangements will make them very competitive in the employer market. They would be more than happy to work with you (the employers who comprise much of CIBO’s membership) on a new (insurance) agreement” on behalf of their employees. “You should talk to your broker about your options.”

Yeatman added, “We also understand these changes are difficult. We are sorry for the impact on you and your businesses.

“Mission Health is this community’s asset. The community owns it. For 125 years, Mission has” served Asheville in particular and Western North Carolina in general. “We know we’re talking about your money. We’re local. Our board is local.

“Agreeing to Blue Cross’ demonstrably unfair terms will put the hospital in peril,” Yeatman concluded. “We believe they are done negotiating.”



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