PeaceHealth and Regence Blue Shield at contract impasse

Thousands of people in western Washington with Regence Blue Shield health insurance may have to pay more for hospital visits at PeaceHealth Medical Group offices if the insurer and health care provider can’t agree on a contract by March 31.

The contract, which sets reimbursement rates, expired January 31 and the two sides have 60 days to come up with a new contract. If an agreement cannot be reached, PeaceHealth will be considered an out-of-network provider for Regence insurance holders, meaning they may have to pay higher costs for services at PeaceHealth facilities such as St. Joseph Medical Center.

Contract renewals happen every two to three years and are typically a nonevent, said Dale Zender, CFO for PeaceHealth St. Joseph Medical Center.

“I cannot think of the last time when an impasse got to this point,” Zender said, guessing that it’s been at least 20 years. “We really pride ourselves in establishing strong relationships.”

Regence is the largest commercial insurer at PeaceHealth’s northwest Washington facilities and pays for more than 60,000 medical treatments each year at those facilities, Zender said.

The two main sticking points in the new contract are: PeaceHealth wants Regence  to pay a higher reimbursement rate to cover rising costs for care, and the insurer would receive a smaller discount from the hospital. Regence is currently receiving the deepest discount of all PeaceHealth’s insurance payers and PeaceHealth is seeking to make its system fairer, Zender said, adding that PeaceHealth paid out $33 million in uncompensated care last year.

“We really value them as a payer, but we really are in disagreement,” he said. “We’re willing to meet them somewhere in between, but we haven’t made any significant agreements yet.”

Higher reimbursement rates, though, mean higher premiums and out-of-pocket costs for Regence insurance customers, said Beth Johnson, vice president of provider services.

“It’s a tough spot to be in becasue we very much value the continuity of care for our members and we want them to be able to visit PeaceHealth, but it’s at a time our members are saying, ‘gosh, healthcare is getting expensive,'” Johnson said.

The two groups are meeting weekly to hammer out a new contract and both sides have expressed a commitment to reaching an agreement. In the meantime, patients with Regence Blue Shield insurance can still receive care at PeaceHealth facilities for in-network prices.


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