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Saint Thomas faces uncertainty after BlueCross exit

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BlueCross BlueShield of Tennessee’s decision to pull out of the individual health insurance market in Nashville has many consumers questioning where they will find health coverage for 2017.

But in addition to finding a new health plan, more than 50,000 Nashvillians affected by this news may need to find a new doctor. This is because, as of this writing, Saint Thomas is not contracted with the carriers that are left in 2017.

Many consumers might be wondering — how did Saint Thomas let this happen? Why isn’t the health system, which comprises nine Middle Tennessee hospitals and a 524-provider medical group, contracted with the other insurance companies? If it isn’t contracted now, why doesn’t it go ahead and get contracted with them?

The answer boils down to the complicated nature of the negotiations that take place between medical providers and insurance companies, coupled with the surprise nature of BlueCross’s decision. In the background is the difficult fact that the health insurance exchanges have not yet worked out as originally planned.

Origins of the partnership

BlueCross and Saint Thomas partnered back in 2013 to form the Nashville portion of BlueCross’s much-heralded Network E. This network was offered only in the individual market, and Saint Thomas was the only Nashville-area health system in it.

What was the thinking at the time? Saint Thomas has the lowest prices of any health system in town, in large part due to the dynamics of the employer group health insurance market. Most employers would never pick a network that only had Saint Thomas because it would lack a pediatric hospital, as well as locations in many suburbs. Historically, this has caused Saint Thomas to have to accept lower reimbursement rates (or prices) from the insurance companies.

But individuals purchasing for themselves, which health care reform was going to produce in droves, would be price-focused and much more likely to be fine with having Saint Thomas as the only hospital system. That is why BlueCross and Saint Thomas partnered to form Network E, and it worked. BlueCross gained the vast majority of market share in the individual market, bringing Saint Thomas thousands of patients.

Reaction to Network E

BlueCross’s partnership with Saint Thomas gave it a huge advantage over the other insurance companies. Because Saint Thomas has the lowest prices, BlueCross was able to charge lower premiums than the other insurance companies could.

This likely caused the other insurance companies to ask for lower prices from TriStar Health in order to compete with the BlueCross-Saint Thomas partnership. TriStar probably agreed to accept lower prices for its services, but only for policies made available in the individual market and only if the insurance companies excluded Saint Thomas.

As a result, heading into 2017 everyone expected that choosing BlueCross meant choosing Saint Thomas and picking Cigna or Humana meant choosing TriStar Health. Because BlueCross decided to leave the market, unless something changes Saint Thomas won’t be an option for consumers buying in the individual market for 2017.

Current dynamics

Rest assured Saint Thomas is trying to get into the networks of Cigna or Humana. If it is unable to do so, it will likely lose thousands of patients. Some of these patients are likely in the middle of important treatments and have developed strong relationships with their doctors that they would hate to be forced to change. There is also the question of whether TriStar Health could even handle so many new patients overnight.

Which leads to the next consideration: If Saint Thomas doesn’t get a contract with Cigna or Humana, it is possible that many doctors who historically have been loyal to Saint Thomas will be open to conversations with TriStar Health. This is because these doctors will have so many patients who will not be able to go to Saint Thomas. Indeed, TriStar Health may not only gain thousands of patients, but could conceivably use this to win the allegiance of many doctor groups who historically were aligned with Saint Thomas. The effects could be felt for years to come.

Given how high the stakes are, one might conclude that a deal will definitely get done between Saint Thomas and Cigna and/or Humana. But these are complicated contracts, and the late date of BlueCross’s announcement did not give a lot of time. Furthermore, it is possible that TriStar Health has influence on what will happen — after all, depending on the degree of exclusivity it has in its contracts, it may be able to prevent Cigna and Humana from acting unilaterally in their negotiations with Saint Thomas. Finally, given that BlueCross left the market because it was losing so much money, there is also the question of whether Cigna and Humana want to make their products more attractive to Nashville’s health care consumers anyway.

Many in health care expect TriStar Health, Humana and Cigna to come together and allow Saint Thomas to be in-network with one or both of the remaining carriers. The terms may not be as favorable as Saint Thomas would like, but too many of Nashville’s health care consumers would be disrupted otherwise. If a deal does not happen, consumers who want to stay with Saint Thomas may consider health care sharing ministries instead of Cigna or Humana. Open enrollment starts on Nov. 1, so we’ll know the answers to these questions soon.

This article was originally published in The Tennessean.  If you enjoyed this post, you may like "Three things to know about BlueCross leaving the exchanges.

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