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A look at what Blue Cross reimburses UMMC, both before and after the contract dispute

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2 years ago

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Blue Cross and Blue Shield of Mississippi and the University of Mississippi Medical Center went head to head for months last year over reimbursement rates. 

Turns out, it wasn’t for nothing.

An analysis by Mississippi Today and The Hilltop Institute at the University of Maryland, Baltimore County shows that in March 2022, during the throes of the dispute, Blue Cross’ negotiated rates were largely lower than other major private insurance companies — Aetna, Cigna, Humana and United — for several common procedures. This was especially true for more expensive procedures and emergency room visits.

A negotiated rate is how much an insurer has agreed to pay an in-network provider through a plan for covered services.

Hospitals perform and are reimbursed for thousands of procedures each year, but what they charge and what insurers pay has largely been kept a secret — that is, until 2021, when the federal government ordered hospitals to start publishing the data.

Mississippi Today worked with The Hilltop Institute to identify 21 common adult and pediatric procedures, then analyzed what Blue Cross reimbursed the hospital for each of those in March 2022, before the entities entered the contract dispute, and in March 2023, after the two entities renegotiated their contract.

Both Blue Cross and UMMC declined to answer any of Mississippi Today’s questions for this story.

The data show that for the selected services, Blue Cross almost never paid close to what UMMC charged, unless it was for cheaper procedures. The only exam that Blue Cross paid exactly what UMMC charged in 2022 was for a fetal non-stress test, which costs $231. (In 2023, when the cost was raised to $400, Blue Cross’ payment increased to $380.)

Hospital prices as of September 2022 show that in general, commercial negotiated rates are on average around 58% of the hospital charge for a given service, according to Morgan Henderson, principal data scientist at Hilltop.

In 2022, Blue Cross largely paid less than other private insurers for more expensive procedures, though the data shows that these insurance companies generally pay less than what UMMC charges.

According to data over the past three fiscal years from the Center for Healthcare Quality and Payment Reform, UMMC charged four times more for services provided to patients than it cost to deliver those services, which Henderson said was in line with what other hospitals charge.

Hospital charges are arbitrary — they can differ substantially from hospital to hospital. It’s rare that any payer gives hospitals the full amount they charge for any service, according to Harold Miller, CEO of the Center for Healthcare Quality and Payment Reform.

Some key findings from 2022 data show:

  • Other insurers paid UMMC $250 for blood tests called total metabolic panels, $151 for comprehensive metabolic panels and $127 for therapeutic exercises. Blue Cross paid $12, $15 and $35, respectively.
  • With the exception of X-rays, Blue Cross paid significantly less than other private insurers did for common radiologic procedures.
  • Preventative care for kids and other services, such as chest radiologic exams and hospital observations, were more equitable compared to what other insurers paid — but they were all services that cost around or less than $150.
  • Blue Cross paid more for vaginal deliveries, C-sections and fetal tests than other companies.

Henderson pointed specifically to Blue Cross’ low reimbursement rates for emergency room visits, one of the more common reasons people visit a hospital.

For the base cost of emergency room visits (not including any other services often charged during ER visits), Blue Cross reimbursed UMMC in March 2022 at far lower rates than other major insurers and what UMMC charges — by thousands.

“In light of this, the fact that BCBS Mississippi pays only $537.38 for a level 5 ED facility fee – for which the charge is almost $4,800 – is especially striking,” Henderson said.

Emergency room visits are categorized, and charged, based on severity. For a mild injury, a patient is charged a base level 1 fee, excluding any tests that might be performed during that visit. The most severe injury constitutes a level 5 emergency room visit.

And as the severity of the emergency room visit goes up, so does the charge. Depending on the level of injury, UMMC can charge anywhere from $468 to $4,796 for an emergency room visit. But for the most severe ER trip, Blue Cross reimbursed UMMC $537, while other insurance companies paid thousands more.

“This is a very good deal for BCBS Mississippi, especially when compared to the negotiated rates that other large commercial insurers pay for this same service,” he said.

As state lawmakers continue not to expand Medicaid, health care administrators across the state report that people who are uninsured and can’t afford preventative care are using the ER more often for general health care needs.

A year later, data from March 2023 shows that payments from Blue Cross for common procedures generally remain lower than other private insurance companies. In some cases, Blue Cross still pays thousands less.

The terms of UMMC’s agreement with Blue Cross, which was decided when the dispute ended in December, have not been disclosed.

Medicare rates are typically used as a gold standard to judge whether insurer payments are too high or too low. While Blue Cross rates are reasonable compared to Medicare payments, they’re still lower than other private insurers.

“I found the (Blue Cross) vs. non-(Blue Cross) price gaps for emergency and some other procedures very large, but in general what you found is expected,” said Ge Bai, a professor of health policy and management at Johns Hopkins Carey Business School, in an email to Mississippi Today.

“Large insurers can flex their muscle on the negotiating table and make threats toward hospitals, such as what (Blue Cross) did last year. Small insurers’ threats won’t be as concerning to hospitals because their beneficiaries do not account for a large portion of the hospital’s patient volume. Therefore, small insurers’ negotiated prices can be relatively higher.”

At a market share of 55%, Blue Cross insures the majority of Mississippians with private insurance, and UMMC is the state’s largest public hospital.

But according to consumer advocates, insurers with lower negotiated rates are supposed to pass those savings on to consumers in the form of low premiums, and if a for-profit company has a big surplus, larger premiums shouldn’t be necessary.

However, that doesn’t seem to be the case for Blue Cross — at least for the past three years.

Alleging they had to pay more in claims than expected, Blue Cross raised premiums in January 2020 for small business plans and individual plans. Since then, the insurance company has raised rates for individual plans at an average of 18% and small group plans at an average of 15.6%, according to data from 2023.

After UMMC asked Blue Cross for substantially increased reimbursement rates last year and Blue Cross refused, the hospital system terminated its contract with the insurance company and subsequently went out of network in April. The move forced tens of thousands of Mississippians to pay significantly more or go elsewhere for health care, including for some services that are only available at one place in Mississippi: UMMC.

UMMC houses the state’s only Level 1 trauma center, Level IV neonatal intensive care unit and children’s hospital. It is also home to the state’s only organ transplant center, where transplant candidates with Blue Cross insurance were marked as “inactive” on the wait lists when the hospital was out of network with the insurer.

During the dispute, UMMC maintained that it was asking for below-market rates for academic medical centers, while Blue Cross officials said to increase reimbursement rates, Mississippians’ premiums would have to go up.

A Mississippi Today investigation found that Blue Cross was sitting on a huge reserve of money, to the tune of $750 million.

While insurers generally try to hold at least three times as much capital as the minimum requirement — a ratio of 300% — to ensure the company can pay out claims, Blue Cross’ ratio has been around 1,600% for years, financial records revealed. It’s significantly larger than Blue Cross peers in neighboring states, and perhaps the largest such surplus by percentage in the country.

State Insurance Commissioner Mike Chaney said it was UMMC’s goal during the dispute to get closer to a 160 to 170% reimbursement rate from Blue Cross compared to Medicare.

Chaney, who advocated on behalf of consumers during the dispute between Blue Cross and UMMC, has long complained about the difficulties in regulating insurance reimbursement rates. He has previously said that Blue Cross won’t make that data available to his office.

New health care price transparency rules, which went into effect in 2021, requires hospitals and insurers to publish their rates, but that doesn’t mean those numbers are easy to access. They’re published on an individual basis, hospital by hospital, and the files, which don’t always look the same, are huge and sometimes hard to decipher.

Gov. Tate Reeves axed a bill earlier this year that would have allowed Chaney’s office the authority to study and address inequalities in reimbursement rates among insurance companies. The bill, which Reeves called a “bad idea,” would have allowed the commissioner to fine companies thousands per violation if they can’t justify unequal reimbursement rates for different hospitals for the same procedures.

“Transparency should provide policy-makers an understanding of what is contributing to the critical financial issues hospitals, clinics, and health providers are facing,” said Mitchell Adcock, executive director of the Center for Mississippi Health Policy. “If payments are not equitable, there are no other financial sources that provide enough revenue to cover health providers' costs.”

And as state leaders continue to oppose expanding Medicaid to the working poor, providers rely on private insurance company payments to offset uncompensated care for people who are uninsured.

Uncompensated care and higher health care costs have worsened the state’s hospital crisis. A third of rural hospitals in Mississippi are at risk of closure.

“The current hospital revenue model, good or bad, is private insurance payments to help cover the limited payments from Medicare and Medicaid and help offset some of the uncompensated care cost,” Adcock said. “Therefore, private insurance payment rates have a significant impact on hospitals’ ability to operate.”

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.

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Mississippi Today

If Tate Reeves calls a tax cut special session, Senate has the option to do nothing

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9 hours ago

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February 23, 2025

By

mississippitoday.org – Bobby Harrison – 2025-02-23 06:00:00

An illness is spreading through the Mississippi Capitol: special session fever.

Speculation is rampant that Gov. Tate Reeves will call a special session if the Senate does not acquiesce to his and the House leadership’s wishes to eliminate the state personal income tax.

Reeves and House leaders are fond of claiming that the about 30% of general fund revenue lost by eliminating the income tax can be offset by growth in other state tax revenue.

House leaders can produce fancy charts showing that the average annual 3% growth rate in state revenue collections can more than offset the revenue lost from a phase out of the income tax.

What is lost in the fancy charts is that the historical 3% growth rate in state revenue includes growth in the personal income tax, which is the second largest source of state revenue. Any growth rate will entail much less revenue if it does not include a 3% growth in the income tax, which would be eliminated if the governor and House leaders have their way. This is important because historically speaking, as state revenue grows so does the cost of providing services, from pay to state employees, to health care costs, to transportation costs, to utility costs and so on.

This does not even include the fact that historically speaking, many state entities providing services have been underfunded by the Legislature, ranging from education to health care, to law enforcement, to transportation. Again, the list goes on and on.

And don’t forget a looming $25 billion shortfall in the state’s Public Employee Retirement System that could create chaos at some point.

But should the Senate not agree to the elimination of the income tax and Reeves calls a special session, there will be tremendous pressure on the Senate leadership, particularly Lt. Gov. Delbert Hosemann, the chamber’s presiding officer.

Generally speaking, a special session will provide more advantages for the eliminate-the-income-tax crowd.

First off, it will be two against one. When the governor and one chamber of the Legislature are on the same page, it is often more difficult for the other chamber to prevail.

The Mississippi Constitution gives the governor sole authority to call a special session and set an agenda. But the Legislature does have discretion in how that agenda is carried out.

And the Legislature always has the option to do nothing during the special session. Simply adjourn and go home is an option.

But the state constitution also says if one chamber is in session, the other house cannot remain out of session for more than three days.

In other words, theoretically, the House and governor working together could keep the Senate in session all year.

In theory, senators could say they are not going to yield to the governor’s wishes and adjourn the special session. But if the House remained in session, the Senate would have to come back in three days. The Senate could then adjourn again, but be forced to come back if the House stubbornly remained in session.

The process could continue all year.

But in the real world, there does not appear to be a mechanism — constitutionally speaking — to force the Senate to come back. The Mississippi Constitution does say members can be “compelled” to attend a session in order to have a quorum, but many experts say that language would not be relevant to make an entire chamber return to session after members had voted to adjourn.

In the past, one chamber has failed to return to the Capitol and suffered no consequences after the other remained in session for more than three days.

As a side note, the Mississippi Constitution does give the governor the authority to end a special session should the two chambers not agree on adjournment. In the early 2000s, then-Gov. Ronnie Musgrove ended a special session when the House and Senate could not agree on a plan to redraw the state’s U.S. House districts to adhere to population shifts found by the U.S. Census.

But would Reeves want to end the special session without approval of his cherished income tax elimination plan?

Probably not.

In 2002 there famously was an 82-day special session to consider proposals to provide businesses more protection from lawsuits. No effort was made to adjourn that session. It just dragged on until the House finally agreed to a significant portion of the Senate plan to provide more lawsuit protection.

In 1969, a special session lasted most of the summer when the Legislature finally agreed to a proposal of then-Gov. John Bell Williams to opt into the federal Medicaid program.

In both those instances, those wanting something passed — Medicaid in the 1960s and lawsuit protections in the 2000s — finally prevailed.

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.

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Mississippi Today

On this day in 1898

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1 day ago

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February 22, 2025

By

mississippitoday.org – Jerry Mitchell – 2025-02-22 07:00:00

Feb. 22, 1898

Lavinia Baker and her five surviving children. A white mob set fire to their house and fatally shot and killed her husband, Frazier Baker, and baby girl Julia on Feb. 22, 1898. Left to right: Sarah; Lincoln, Lavinia; Wille; Cora, Rosa Credit: Wikipedia

Frazier Baker, the first Black postmaster of the small town of Lake City, South Carolina, and his baby daughter, Julia, were killed, and his wife and three other daughters were injured when a lynch mob attacked. 

When President William McKinley appointed Baker the previous year, local whites began to attack Baker’s abilities. Postal inspectors determined the accusations were unfounded, but that didn’t halt those determined to destroy him. 

Hundreds of whites set fire to the post office, where the Bakers lived, and reportedly fired up to 100 bullets into their home. Outraged citizens in town wrote a resolution describing the attack and 25 years of “lawlessness” and “bloody butchery” in the area. 

Crusading journalist Ida B. Wells wrote the White House about the attack, noting that the family was now in the Black hospital in Charleston “and when they recover sufficiently to be discharged, they) have no dollar with which to buy food, shelter or raiment. 

McKinley ordered an investigation that led to charges against 13 men, but no one was ever convicted. The family left South Carolina for Boston, and later that year, the first nationwide civil rights organization in the U.S., the National Afro-American Council, was formed. 

In 2019, the Lake City post office was renamed to honor Frazier Baker. 

“We, as a family, are glad that the recognition of this painful event finally happened,” his great-niece, Dr. Fostenia Baker said. “It’s long overdue.”

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.

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Memorial Health System takes over Biloxi hospital, what will change?

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2 days ago

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February 21, 2025

By

mississippitoday.org – Roy Howard Community Journalism Center – 2025-02-21 15:22:00

by Justin Glowacki  with contributions from Rasheed Ambrose, Javion Henry, McKenna Klamm, Matt Martin and Aidan Tarrant

BILOXI – On Feb. 1, Memorial Health System officially took over Merit Health Biloxi, solidifying its position as the dominant healthcare provider in the region. According to Fitch Ratings, Memorial now controls more than 85% of the local health care market.

This isn’t Memorial’s first hospital acquisition. In 2019, it took over Stone County Hospital and expanded services. Memorial considers that transition a success and expects similar results in Biloxi.

However, health care experts caution that when one provider dominates a market, it can lead to higher prices and fewer options for patients.

Expanding specialty care and services

Kristian Spear, Hospital Administrator at Memorial Hospital Biloxi, speaks on the hospital’s acquisition and future goals for improvement. (RHCJC News)

One of the biggest benefits of the acquisition, according to Kristian Spear, the new administrator of Memorial Hospital Biloxi, will be access to Memorial’s referral network.

By joining Memorial’s network, Biloxi patients will have access to more services, over 40 specialties and over 100 clinics.

“Everything that you can get at Gulfport, you will have access to here through the referral system,” Spear said.

One of the first improvements will be the reopening of the Radiation Oncology Clinic at Cedar Lake, which previously shut down due to “availability shortages,” though hospital administration did not expand on what that entailed.

“In the next few months, the community will see a difference,” Spear said. “We’re going to bring resources here that they haven’t had.”

Beyond specialty care, Memorial is also expanding hospital services and increasing capacity. Angela Benda, director of quality and performance improvement at Memorial Hospital Biloxi, said the hospital is focused on growth.

“We’re a 153-bed hospital, and we average a census of right now about 30 to 40 a day. It’s not that much, and so, the plan is just to grow and give more services,” Benda said. “So, we’re going to expand on the fifth floor, open up more beds, more admissions, more surgeries, more provider presence, especially around the specialties like cardiology and OB-GYN and just a few others like that.”

For patient Kenneth Pritchett, a Biloxi resident for over 30 years, those changes couldn’t come soon enough.

Keneth Pritchett, a Biloxi resident for over 30 years, speaks on the introduction of new services at Memorial Hospital Biloxi. (RHCJC News) Credit: Larrison Campbell, Mississippi Today

Pritchett, who was diagnosed with congestive heart failure, received treatment at Merit Health Biloxi. He currently sees a cardiologist in Cedar Lake, a 15-minute drive on the interstate. He says having a cardiologist in Biloxi would make a difference.

“Yes, it’d be very helpful if it was closer,” Pritchett said. “That’d be right across the track instead of going on the interstate.”

Beyond specialty services and expanded capacity, Memorial is upgrading medical equipment and renovating the hospital to improve both function and appearance. As far as a timeline for these changes, Memorial said, “We are taking time to assess the needs and will make adjustments that make sense for patient care and employee workflow as time and budget allow.”

Unanswered questions: insurance and staffing

As Memorial Health System takes over Merit Health Biloxi, two major questions remain:

  1. Will patients still be covered under the same insurance plans?
  2. Will current hospital staff keep their jobs?

Insurance Concerns

Memorial has not finalized agreements with all insurance providers and has not provided a timeline for when those agreements will be in place.

In a statement, the hospital said:

“Memorial recommends that patients contact their insurance provider to get their specific coverage questions answered. However, patients should always seek to get the care they need, and Memorial will work through the financial process with the payers and the patients afterward.”

We asked Memorial Health System how the insurance agreements were handled after it acquired Stone County Hospital. They said they had “no additional input.”

What about hospital staff?

According to Spear, Merit Health Biloxi had around 500 employees.

“A lot of the employees here have worked here for many, many years. They’re very loyal. I want to continue that, and I want them to come to me when they have any concerns, questions, and I want to work with this team together,” Spear said.

She explained that there will be a 90-day transitional period where all employees are integrated into Memorial Health System’s software.

“Employees are not going to notice much of a difference. They’re still going to come to work. They’re going to do their day-to-day job. Over the next few months, we will probably do some transitioning of their computer system. But that’s not going to be right away.”

The transition to new ownership also means Memorial will evaluate how the hospital is operated and determine if changes need to be made.

“As we get it and assess the different workflows and the different policies, there will be some changes to that over time. Just it’s going to take time to get in here and figure that out.”

During this 90-day period, Erin Rosetti, Communications Manager at Memorial Health System said, “Biloxi employees in good standing will transition to Memorial at the same pay rate and equivalent job title.”

Kent Nicaud, President and CEO of Memorial Health System, said in a statement that the hospital is committed to “supporting our staff and ensuring they are aligned with the long-term vision of our health system.”

What research says about hospital consolidations

While Memorial is promising improvements, larger trends in hospital mergers raise important questions.

Research published by the Rand Corporation, a nonprofit, nonpartisan research organization, found that research into hospital consolidations reported increased prices anywhere from 3.9% to 65%, even among nonprofit hospitals.

Source: Liu, Jodi L., Zachary M. Levinson, Annetta Zhou, Xiaoxi Zhao, PhuongGiang Nguyen, and Nabeel Qureshi, Environmental Scan on Consolidation Trends and Impacts in Health Care Markets. Santa Monica, CA: RAND Corporation, 2022.

The impact on patient care is mixed. Some studies suggest merging hospitals can streamline services and improve efficiency. Others indicate mergers reduce competition, which can drive up costs without necessarily improving care.

When asked about potential changes to the cost of care, hospital leaders declined to comment until after negations with insurance companies are finalized, but did clarify Memorial’s “prices are set.”

“We have a proven record of being able to go into institutions and transform them,” said Angie Juzang, Vice President of Marketing and Community Relations at Memorial Health System.

When Memorial acquired Stone County Hospital, it expanded the emergency room to provide 24/7 emergency room coverage and renovated the interior.

When asked whether prices increased after the Stone County acquisition, Memorial responded:

“Our presence has expanded access to health care for everyone in Stone County and the surrounding communities. We are providing quality healthcare, regardless of a patient’s ability to pay.”

The response did not directly address whether prices went up — leaving the question unanswered.

The bigger picture: Hospital consolidations on the rise

According to health care consulting firm Kaufman Hall, hospital mergers and acquisitions are returning to pre-pandemic levels and are expected to increase through 2025.

Hospitals are seeking stronger financial partnerships to help expand services and remain stable in an uncertain health care market.

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Source: Kaufman Hall M&A Review

Proponents of hospital consolidations argue mergers help hospitals operate more efficiently by:

  • Sharing resources.
  • Reducing overhead costs.
  • Negotiating better supply pricing.

However, opponents warn few competitors in a market can:

  • Reduce incentives to lower prices.
  • Slow wage increases for hospital staff.
  • Lessen the pressure to improve services.

Leemore Dafny, PhD, a professor at Harvard and former deputy director for health care and antitrust at the Federal Trade Commission’s Bureau of Economics, has studied hospital consolidations extensively.

In testimony before Congress, she warned: “When rivals merge, prices increase, and there’s scant evidence of improvements in the quality of care that patients receive. There is also a fair amount of evidence that quality of care decreases.”

Meanwhile, an American Hospital Association analysis found consolidations lead to a 3.3% reduction in annual operating expenses and a 3.7% reduction in revenue per patient.

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.

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