Why BlueCross BlueShield of Tennessee is renegotiating provider network contracts 

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The need for affordability more urgent than ever. Many customers are telling us they place more value on lowering costs than on having more provider options within our networks.

Cost is a concept that drives virtually every aspect of our daily lives, and today it dominates the national conversation as Tennesseans face higher prices on everything from gas to groceries.  

Understandably, everyone is looking for ways to save money. And Tennessee businesses and patients can’t afford for health care costs to keep going up, too.

In 2021, we paid out a record $16.76 billion in claims for our members and used 88 cents from every premium dollar to pay those claims. And we worked hard to manage operating costs effectively to keep costs down for Tennessee-based employers and our members.

For health insurers, a powerful tool that delivers savings is provider networks. In exchange for discounted rates, these networks bring more patients to participating providers — and help insurers make sure providers meet safety and quality standards.

Affordability is more important than ever

At BlueCross, we’ve always balanced choice — lots of providers in our networks — and costs, because both are important to health care consumers.

Our employer group customers have always asked us to help manage their costs. But now, with the need for affordability more urgent than ever, many of these customers are telling us they place more value on lowering costs than on having more provider options within our networks.

To help keep costs low for all of our members and customers, we’re actively negotiating new contracts — and in some cases, ending contracts — with providers who are paid much more than their peers or are requesting significant rate increases.

An important distinction is that we’re focusing these renegotiation efforts on providers who work at but aren’t employed directly by in-network hospitals.

This includes emergency department providers, radiologists and anesthesiologists, among others. Some of these providers are paid 40% to 90% higher than the average among their local peers.

We are not trying to lower payments for all providers

The obvious question is “How does this happen?” Simply put, some hospital-based providers have tried to boost their revenues by threatening to leave our network, then bill our members for the difference between their “list price” and what BlueCross typically pays for those services. We’ve sometimes agreed to higher rates to protect our members from this harmful billing practice.

Now, the law protects our members from getting these kinds of unexpected bills.

Thankfully, our members won’t have to face higher costs even if certain providers are no longer in-network. The law prevents these providers from billing our members more than our in-network providers can for the same care and services, meaning their portion of the cost won’t change.

This allows us to fight more effectively for lower costs on their behalf. And our new contract offers would deliver an estimated $65 million in annual savings and help offset premium increases that result from the rapidly increasing cost of care.

We want to stress that we’re not trying to lower payments to all providers, just to those cost outliers who’ve been making significantly more than their local peers. We’re asking these providers to accept fair market rates that bring them in line with other providers in our networks. We’re also evaluating cost outliers in other categories, like hospital facilities.

Where do the talks stand?

So, where do these renegotiation efforts stand?

We’ve notified these providers that, if we’re unable to reach agreements, they’ll no longer be a part of our networks.

We hope these providers make the right choice and continue to be part of our networks, with rates that are more affordable for our members and customers.

These providers are our partners, and we want to continue our relationships — we value their expertise, the care that they provide, the trust our members have placed in them.

But our priority must be meeting our members’ need for affordability. And we can all agree that quality care at an affordable price is a goal worth reaching.

Scott Pierce is executive vice president and chief operating officer of BlueCross BlueShield of Tennessee.

This article originally appeared as an op-ed in The Tennessean.