Blue Cross Blue Shield, Salina Regional Health begin battle over payment rates

Blue Cross Blue Shield of Kansas and Salina Regional Health have taken negotiations about competitive payment rates public, with the hospital claiming the insurance company was misleading about rates it paid other systems.

Salina Regional claims the insurance company paid comparable health systems in the state up to 50% higher rates than it paid Salina Regional for at least two years. Blue Cross of Kansas stated the rates Salina Regional is negotiating for are unreasonable and could cost members thousands of dollars.

Salina Regional's CEO Joel Phelps sent a mass email to hospital staff April 27 about in-network access to Blue Cross of Kansas. The email was in response to a video message from Blue Cross of Kansas about access, and the healthcare provider entering negotiations with the insurance company.

"(Salina Regional) needs to be paid fairly, and that means (Blue Cross of Kansas) making our payment rates equal to other comparable hospitals in the state," Phelps wrote in an email to staff.

In its video, Blue Cross says Salina Regional is seeking hikes that would come with a substantial cost to members, and appealed to the public to consider their own financial contributions.

"When we pay them more money, you pay them more," said Blue Cross of Kansas CEO Matt All in the video.

Salina Regional said it noticed discrepancies in rates of pay when the health system started comparing publicly available data found on its competitor's — Lawrence, Stormont Vail, St. Francis, and Manhattan — websites. This data is relatively new after laws were passed in 2021 calling for more transparency to the public regarding hospital prices.

Beginning July 1, 2022, health insurers and self-insured employers were required to post on websites itemized prices they negotiated with providers for health care services. The exception to the law is prices paid for prescription drugs, except those administered in hospitals or doctors' offices.

Experts believed releasing this data could have an effect on future prices and how employers contract for healthcare, as it provides the public insight on how their insurers are faring compared to others. And insight on accurate dollar amounts paid to hospitals by insurance companies.

Blue Cross of Kansas has at least partially complied with the federal mandate, as negotiated payment rates are available on competing health system websites. Blue Cross of Kansas did not respond in time for publication about its rates paid to hospital systems comparable to Salina Regional.

Salina Regional, Blue Cross of Kansas make appeals to the public in recent messaging

Each year, Blue Cross of Kansas sends every hospital and physician in the state a letter outlining the payment rates for the care they provide the following year. Providers must sign the letter by a given deadline or the contract ends, and they become an out-of-network provider.

Phelps said Salina Regional has not been immune to financial pressures hospitals across the nation have endured over the last few years. Uncontrollable circumstances like the pandemic and supply issues have driven up the cost of care and hospital prices have risen faster than general inflation.

Salina Regional argues that Blue Cross of Kansas pays it too little for the service the health system provides as costs continue to rise. In his email to staff, Phelps said Salina Regional will have no choice but to go out of network if Blue Cross of Kansas does not increase its payment rates.

"We get it. No one wants to pay more for healthcare," Phelps said in an email to staff. "We don’t want you or your employees to pay more either. We know Blue Cross has the money without raising premiums one penny."

But Blue Cross of Kansas holds that current demands from Salina Regional is not a fair ask.

"(Salina Regional) executives are demanding more money, drastically more money, beyond the fair and reasonable rates that we already pay them," All said in a statement.

What does this mean for Blue Cross of Kansas members?

While both sides of these negotiations claim to represent patients' best interests, the results of them have historically left patients navigating the financial stakes that result, like limited access and affordability.

The ongoing tension between insurance companies and healthcare providers is not limited to Kansas and stretches across the nation. But it often stays out of public purview until they become patients in the country's complicated health system.

The battle between Salina Regional and Blue Cross of Kansas has already thrust the public, members of Blue Cross of Kansas, into the center of the debate in its early stages. The importance of high-quality medical care close to home, and overall affordability of care for members, is leveraged by both parties.

Blue Cross of Kansas had a similar negotiation dispute with Lawrence Memorial Hospital in 2021, after a think tank that studies hospital insurance claims found large health plans got a better deal at Lincoln Memorial than the national average.

Despite growing tensions, both parties acknowledged that they want to come to an agreement that is mutually beneficial. As negotiations continue, members can still receive Blue Cross in-network care at Salina Regional. The current contract between Blue Cross of Kansas and Salina Regional ends this year on Dec. 31.

This is a developing story. The Salina Journal will provide updates as negotiations continue and more information, including various rates provided to competing hospitals, comes available.

Kendrick Calfee has been a reporter with the Salina Journal since 2022, primarily covering county government and education. You can reach him at kcalfee@gannett.com or on Twitter @calfee_kc.

This article originally appeared on Salina Journal: Blue Cross of Kansas, Salina hospital negotiates with public at center