Wellmont, BlueCross BlueShield Tennessee reach agreement

Wellmont Health System needed a week to negotiate a contract extension with BlueCross BlueShield Tennessee through mid-2015, an insurance official said. They signed the agreement Friday morning.

“It was an easy process with them,” said the insurer’s spokeswoman, Mary Danielson. “It was a renewal that was coming up and we were able to come up with something.”

By contrast, Mountain States Health Alliance has tried to hammer out a contract with the health insurer since November. An agreement must be reached by June 30 or the hospital chain drops the insurer’s coverage.

Mountain States officials have said the insurance company wants to cut too deeply into service reimbursement rates. BlueCross BlueShield officials have said the health system’s current rates don’t match up to other systems in the region.

Another contract meeting between the health care company and the insurer is set for next week, Danielson said.

Wellmont’s contract agreement continues coverage at five of its Tennessee hospitals for BlueCross BlueShield patients covered through Blue Networks P and S, the health plan’s two largest provider networks.

The health care chain has three hospitals and some outpatient facilities in Virginia that continue to work with other BlueCross BlueShield Plans.

Wellmont estimates its net revenues for the 2013 fiscal year to run between $800 million to $840 million, said the health system’s chief financial officer, Alice Pope.

Eight percent of that overall business flows from BlueCross BlueShield of Tennessee, she added. Ten-percent comes from Medicaid, which covers low-income and disabled patients, and 55-percent is from Medicare, which covers elderly patients.

Pope estimates that the company’s net profit margin will run between 1 percent and 2 percent.

On the Mountain States front, BlueCross sent a letter to its more than 26,000 members in April describing the prolonged contract negotiations. Without a renewal, the hospital chain will no longer be an in-network provider for the insurer’s P, S and V networks. The negotiation affects only BlueCross BlueShield of Tennessee members and not those with BlueCross in other states or those who receive TennCare or Medicare Advantage.

Within the next three years, Mountain States estimates it will sustain $503 million in reimbursement from the government. Health system officials have said that a significant portion of its patients have BlueCross BlueShield of Tennessee coverage.

According to the health system, its net profit margin for 2012 was less than 1 percent.

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