A statement from LMH Health on BCBS of Kansas negotiations
LMH Health is an independent system that has served Lawrence and the surrounding communities for a century. Being compensated appropriately for the exceptional services we provide is critical for our community’s well-being and the quality of care that you have come to expect from LMH. Therefore it’s important that we have fair contracts with all of our insurance partners.
Last year, despite our best attempts, we saw contract negotiations for our 2021 agreement with Blue Cross Blue Shield of Kansas (BCBSKS) continue through much of the fall and into December. In an effort to avoid this 11th-hour situation this year, our team connected with BCBSKS in February 2021. Unfortunately, BCBSKS didn’t engage until recently when they gave us a proposal for deeper cuts. Though we were optimistic we would reach a fair agreement, our negotiating team has become increasingly concerned.
We simply could not accept the offer from BCBSKS. As it stood, it would hinder our ability to operate as we do today. This is why we announced Wednesday that we may not be contracted in 2022.
At the end of last week, our team notified BCBSKS that the offer they presented wasn’t reasonable and we provided a counteroffer. Late on Wednesday, BCBSKS indicated that they strongly want us in their network, and they will provide a counteroffer. As of this morning, the ball is in BCBSKS’ court.
BCBSKS has until December 31, 2021, to come to an agreement with LMH. Until then, nothing changes. If no agreement is reached by then, on January 1, 2022, LMH will be forced out of BCBSKS's network. As open enrollment is currently underway within some organizations, we knew we needed to be transparent about the status of negotiations so our community can plan accordingly. (It is important to note that even if we are unable to reach an agreement by January 1, 2022, BCBSKS Medicare supplement/Medigap plan members will continue to receive in-network care at LMH. Medicare Advantage plans and BCBSKS commercial plans via employers would be out of network.)
We’ve had a steady decline in reimbursements since 2018, and this year’s proposal from BCBSKS was no different, representing a cut from our 2021 payments by several million dollars. Nearly everything else around us has changed, though – the pandemic has created challenges for almost every industry, and healthcare is no exception. Nurses must be paid more. Supply and workforce costs are skyrocketing. Agency labor is up by 10 times, with our costs in September alone reaching $450,000. We’re working hard to adapt, just like every other healthcare system across the country. BCBSKS must adapt, too.
Instead, BCBSKS is proposing a reduction in reimbursements to our doctors and our hospital – simultaneously, they are raising premiums for employers. This difference is reflected in BCBSKS’s profitability; which doubled between 2019 and 2020. They also currently hold $2 billion in reserves. BCBSKS is the goliath in this situation – not LMH. As an independent, charitable care, community hospital, we cannot accept further cuts and contend with the realities of our economy while maintaining our commitment to this community.
LMH Health’s leadership team, with support from the Board of Trustees, has decided that we must stand our ground and come to a fair agreement with BCBSKS. That’s why we urged our patients to ensure their selected coverage for 2022 allows them to continue to receive their trusted care at LMH.
In this effort, we are protecting your access to exceptional physicians and providers in nearly every area of medicine. We are protecting the care you receive. We are protecting our ability to invest strategically, ensuring you have continued access to the best primary care available right here at home. We are protecting your access to specialty care. To progressive orthopedic care. To a live-saving heart cath lab. To a Commission on Cancer-certified cancer center. And perhaps most importantly, we are protecting a 100-year promise to provide care for all who need it, regardless of ability to pay.
BCBSKS recently mischaracterized LMH’s ask as one that would amount to millions of dollars in additional costs to the people of Douglas County. This is simply not true. In reality, BCBSKS asked us to accept a cut of millions of dollars. Even with a fairer contract, BCBSKS’s payments to other hospitals would continue to be higher than what LMH receives. BCBSKS does not have to automatically raise premiums based on a single hospital; this is simply an attempt to get its members and providers like LMH to shoulder more of the burden in paying for the cost of care – either by arbitrarily raising premiums or by underpaying providers.
According to the RAND Corporation’s Employer Hospital Price Transparency Project from 2020, LMH’s pricing is well below our closest competitor and demonstrates that LMH is the highest value, lowest cost provider in the area. BCBSKS may assert that our requests are unreasonable but know this: if BCBSKS were to meet each of our fair contract asks, LMH would still be their lowest-cost hospital in the region.
We are not asking BCBSKS for anything more than what we need – fair rates that we receive from other payers, rates that align with those they provide to other hospitals in the area, and funds that are invested directly into high-quality care that saves people’s lives. Doing so will not automatically drive costs up for Douglas County residents – it will only reduce BCBSKS’s profitability. BCBSKS’ drive to maintain their massive market share is what’s driving up costs, not LMH’s request for fairer rates.
We are taking this negotiating position to protect you, our patients, from an unsustainable agreement that threatens your best interests. We are working to protect our providers, nurses, and staff. We know our community takes pride in being home to an independent community hospital – a rarity considering the mergers and acquisitions across the country. No insurance company should have the ability to demand payments fully on their terms, bankrupt a health system, nor force it to sell.
Don’t buy in to the notion that LMH is somehow being greedy or demanding unreasonable payment from BCBSKS. We are committed to protecting you, and that means working hard to ensure the premiums you pay for your coverage stay here, in our community. You deserve no less.
LMH Health will continue to provide you with regular updates, though a lot remains unknown at this time. The coming days and weeks are very important to our community’s future. We will be open and transparent with you as negotiations continue, and we invite any questions you may have.