Dispute between Nebraska insurance company and hospitals reflects national changes

One of Nebraska’s largest insurance companies is jousting with one of the state’s largest group of hospitals, in a dispute over money. But the contest reflects changes in healthcare nationwide, as well.

In the meeting room of a Lincoln hotel, about 50 people gathered this week to listen and ask questions about possible changes in their health insurance coverage.

At the front of the room, two Blue Cross and Blue Shield of Nebraska executives explained their side of the argument between the insurance company and CHI Health – the Nebraska arm of Colorado-based Catholic Health Initiatives.

CHI Health includes 12 hospitals in Nebraska – four in Omaha, and others in Kearney, Grand Island, Plainview, Schuyler, Lincoln, Nebraska City and Papillion. Blue Cross and Blue Shield says CHI charges too much for treating patients in Omaha. Unless CHI agrees to changes by the end of this month, its hospitals around the state -- as well as about 1,400 doctors and other health care providers – will be considered “out of network.”

Policyholders could still go to those providers, but they could have to pay much higher costs. There would be exceptions for certain categories of care, like emergencies and ongoing cancer treatment. But that doesn’t address the concerns of people like Barb Hellerich, who had surgery on her esophagus at Omaha’s Creighton University Medical Center this spring.

“The concern is, I have a surgeon that’s connected with Alegent Creighton (the former name for part of CHI Health). And he’s the only one that does the surgery that I had,” Hellerich said. “I would want to continue to be able to go to him. And yet I don’t fit in any of those categories.”

CHI Health CEO Cliff Robertson suggested Blue Cross and Blue Shield is using patients as pawns by announcing it

would terminate its contract.

“They chose to do that specifically to put patients in the middle of a negotiation that should be handled behind closed doors, and at a negotiation table,” Robertson said.

At the Lincoln meeting, Blue Cross and Blue Shield executive Lee Handke took exception to Robertson’s position.

“We don’t agree with that. We think it’s time for health care to be like any other service, where you as a consumer of health care, and your physician have good information about both the costs and the quality of health care so you can be empowered to make better decisions,” Handke said.

While negotiations continue behind closed doors, Blue Cross and Blue Shield is also going public with its argument against CHI. Blue Cross and Blue Shield executive Pat Bourne gave the Lincoln audience an example.

“On average, we pay around… $4,300 for a pregnancy, a normal birth. And CHI will bill about $33,000. And so you see that spread is pretty significant. So that’s a communication with your doctor to find out how they’re going to treat that,” Bourne said.

Robertson said that’s misleading. “What they may be trying to do is confuse patients, because what we expect to be paid -- regardless of what is charged -- what we expect to be paid is very close to that $4,300 that they say is their usual and typical payment for a normal delivery,” Robertson said.

Robertson also suggested Blue Cross and Blue Shield’s real argument is with doctors, and disputed whether CHI costs are out of line with other providers.

Disputes like this are nothing new, experts say. Insurance companies have cut individual hospitals in Nebraska out of their networks in the past. But this situation is different, said Maureen Swan, president of MedTrend, a Minnesota-based health care consultant.

“This is unusual that it gets to the level where it hits the newspapers and press releases,” Swan said.

Nebraska State Sen. Mike Gloor said he went through a similar dispute with Blue Cross and Blue Shield a couple of decades ago, when he worked for CHI as CEO of St. Francis Medical Center in Grand Island. Gloor now chairs the legislative committee that oversees insurance companies. He said another way this dispute differs from previous ones is that instead of being limited to one community, it extends across the state and involves more hospitals.

Swan said that expansion of the scope of the dispute reflects a nationwide trend.

“We are seeing more consolidation in health care, both on the payer side – and by payer I mean Blue Cross/Blue Shield; health insurance plans -- and on the hospital side,” Swan said. “So some of what you’re seeing is the not-surprising negotiating leverage of size between increasingly larger players who dominate the marketplace.”

Swan said everyone is looking for ways to cut health care costs. The country is moving away from paying for individual medical procedures – the so called “fee-for-services” model, and toward paying for outcomes – dubbed the “value-based” approach.

That change in approach can involve forming new networks to steer patients away from hospitals to less expensive clinics or home treatment. And it raises questions of who will form and control those networks. Swan said the dispute in Nebraska reflects those issues as well.

“This is part of the dance that’s going on across the country between those who are writing the checks for health care and those who are providing the health care to try and find a way to hold down premium increases and costs of care to patients and families,” Swan said.

Gloor said that in the process, traditional roles are becoming blurred. In Pittsburgh, for example, Blue Cross and Blue Shield bought a hospital chain, and a rival hospital chain has created an insurance company. While that hasn’t happened in Nebraska, he said, the potential is there for former partners to become competitors.

Back at the meeting in Lincoln, Barb Hellerich’s concern about having to switch doctors was relieved when she learned that Medicare patients will not be affected. But many other Nebraskans may still see changes to their health care, depending on whether, when, and how the dispute is resolved.