JACKSON, Miss. (AP) -- Blue Cross & Blue Shield of Mississippi has told the state's second-largest hospital owner that it will end its contract with the company's 10 Mississippi hospitals at the end of August.
The insurer sent the termination notice to Health Management Associates hospitals statewide on June 25. Naples, Fla.-based HMA had sued Blue Cross for $13 million a week earlier, claiming the Flowood, Miss., insurer is breaking contract terms by underpaying for a number of procedures.
At the same time, Blue Cross and Jackson's University of Mississippi Medical Center continue talks over payment rates, with the chance that the insurer will no longer contract for treatment at the state's largest hospital. The deadline for that contract to end was Wednesday, but it was extended this week and now would end Aug. 28, barring an agreement or extension.
If Blue Cross no longer has contracts, hospitals would be reimbursed at lower out-of-network rates, meaning patients could face higher out-of-pocket costs. Changes would not apply to patients covered by the State and School Employees' Health Insurance Plan. The state government is self-insured and Blue Cross only administers its plan.
It's a clash between three of the largest economic entities in Mississippi's health care market. Blue Cross & Blue Shield, which is owned by its policyholders, had 54 percent of the health insurance market in Mississippi in 2012, according to the American Medical Association.
UMMC cares for the most inpatients in Mississippi, with about 10.7 percent of the average daily patient count statewide in 2012, according to state Health Department figures. HMA's 10 hospitals combined had about 10.4 percent of the average patient count statewide, the second-largest share.
HMA's 10 Mississippi facilities are Biloxi Regional Medical Center, River Oaks Hospital and Woman's Hospital in Flowood, Crossgates River Oaks Hospital in Brandon, Madison River Oaks Medical Center in Canton, Central Mississippi Medical Center in Jackson, Natchez Community Hospital, Gilmore Regional Medical Center in Amory, Northwest Mississippi Medical Center in Clarksdale and Tri-Lakes Medical Center in Batesville.
Blue Cross has had disputes with large Mississippi hospitals before. Tupelo's North Mississippi Medical Center was out-of-network from 2003 into 2005 before reaching an agreement, while Memorial Hospital at Gulfport was out-of-network for a period that included part of 1999.
HMA's dispute with Blue Cross runs back about two years, said Kace Ragan, spokeswoman for the hospital company. She said the company has been trying to negotiate issues surrounding what HMA sees as unilateral payment cuts that violate contracts with the company's hospitals. Ragan said Blue Cross did not respond to HMA's requests, and the company decided to sue the insurer. The suit, filed June 18 in Hinds County Circuit Court, seeks $13 million in damages for 2012 and 2013, plus interest and punitive damages.
A week later, Blue Cross sent HMA a letter terminating contracts. Ragan said that under the terms of its contracts, HMA says Blue Cross will cut network coverage of its hospitals at the end of August.
"We believe that it is the goal of HMA to maximize profits," Blue Cross Chief Medical Officer Dr. Tom Fentner said in a statement. "We believe that such a goal is inconsistent with Blue Cross & Blue Shield of Mississippi's goal of managing health care costs for our members. This difference in philosophies is why we cancelled their network agreements."
The university began negotiating with Blue Cross earlier this year, spokesman Jack Mazurak said, seeking higher reimbursement rates. As part of that negotiation, UMMC set a termination date of June 28, which has now been extended twice.
"We came to see that we are substantially underpaid as compared to other academic health science centers," Mazurak said. "We're providing acute care, the state's only Level 1 trauma center, the state's only children's hospital, the state's only organ transplant center."
Mazurak said UMMC also has concerns that Blue Cross is changing payments without contract authority.
"We also have similar concerns we're addressing in negotiations about midstream changes to the contract," he said.
Fentner said it's "unfortunate" that Blue Cross hasn't been able to reach an agreement with UMMC.
"In our network relationships with all of our providers, our priority has been, and will continue to be, to manage the cost of health care and ensure our members receive the medically necessary care they need with the value of being covered by Blue Cross Blue Shield," he said.
Insurance brokers are telling employers statewide, who in turn are informing their employees. Some patients with procedures scheduled after cutoff dates are switching to other physicians or hospitals.
Fentner said Blue Cross will make sure services that only UMMC provides will still be covered at in-network rates, including emergency services. Meanwhile, Ragan said HMA is considering, at least on a case-by-case basis, cutting or waiving higher out-of-network expenses. Memorial at Gulfport took the same tack while it was out-of-network.
"We don't want them to automatically say, 'We're not going to go to one of those hospitals,'" Ragan said. "We will do what we can to take that burden away from them."
Follow Jeff Amy at http://twitter.com/jeffamy