Some Chattanooga residents may remember contract negotiations between BlueCross BlueShield of Tennessee and CHI Memorial in 2021. It was the height of the COVID-19 pandemic, and the uncertainty caused a lot of stress for our members.
We knew our members needed care at CHI Memorial, so after extensive negotiations, we agreed to pay higher rates. This unfortunately increased costs for those we serve, but it was the only way to limit the disruption during a pandemic.
Almost every hospital system we work with has an “evergreen” contract, or one without a specific end date. We like this approach because it gives peace of mind to members who can count on access to care with their preferred provider. But in our 2021 agreement, CHI Memorial insisted on a “hard termination” of that agreement, set for June 30, 2024. We knew what was coming: another push for more money.
That’s exactly what we got starting last May – less than two years after signing a new agreement. CHI Memorial began knocking on BlueCross’ door, demanding more from us. They’re being led by negotiators from Chicago-based parent company, CommonSpirit. And that’s part of a pattern with CommonSpirit, who’s led fights for rate hikes across the country.
And it’s just one of the reasons we’ve become disappointed in CHI Memorial as a partner.
Since becoming part of Chicago-based CommonSpirit, CHI Memorial has repeatedly pushed us to pay them higher and higher rates. It’s part of a pattern by CommonSpirit, who has led high-profile rate fights across the country.
Less than two years after we agreed to a significant rate increase, they came back asking for more – and even pushed for an early end to our contract.
Public data shows that CHI Memorial provides the least amount of charitable care of any local health system.
CHI Memorial sees only a small number of our BlueCare (TennCare) members. They’ve also chosen not to participate in our SelectCommunity, which provides coverage to Tennesseans with intellectual and developmental disabilities.
The bottom line is that CommonSpirit asked for an increase of roughly $70 million over three years, a nearly 40 percent jump in rates. We compared CommonSpirit’s proposal to our agreements with other hospitals, and it would make CHI Memorial the most expensive hospital system in the state.
Here’s what their demands would mean to everyday Chattanoogans:
A business owner covering 125 people on their health plan would pay around $100,000 more in premiums over the next three years.
Many members would pay more for common imaging services, with CT scans rising $150 to more than $500 and MRIs going up almost $200 to more than $700.
An outpatient total knee replacement would cost around $4,800 more for a member in Blue Network S – that’s 39 percent higher than today. Even after a member hits their out-of-pocket maximum, those extra costs get passed on to employers either directly or through higher premiums.
An inpatient coronary bypass would cost around $24,000 more for a member in Network S, taking the price from $61,000 to $85,000.
These higher prices are simply unacceptable.
How we’re responding to CHI Memorial’s unreasonable requests.
We declined their push for a rushed timeline. Last fall, CHI Memorial requested an early termination of our contract and a renegotiation with an effective date of Jan. 1, 2024. We declined this rushed timeline, opting to keep the original contract expiration of June 30, 2024, to minimize potential impact on our members were the hospital and its affiliates to leave our networks.
We’re making sure you know you still have time. BlueCross members will continue to have in-network access at CHI Memorial facilities and with your physicians through June 30 – and beyond, if Memorial agrees to reasonable rates. We’re sharing this information now because we believe you deserve transparency.
We’re seeking bids for a second health system in Network S. At this point, it’s clear they may not be a good fit to remain in our high-value commercial network, Network S. Here in Chattanooga, Erlanger is the primary system for that network, but CHI Memorial has also been part of the network for many years.
But that may change soon. On Jan. 22, we issued a Request for Proposal for the second spot in our Blue Network S, and we’ll make a decision in April. We owe it to local employers and our members to consider all our options.
We’re continuing to advocate for affordability. CHI Memorial’s requests would make them the most expensive hospital system in the state. We simply can’t agree to that – because you can’t afford it.
Our Network S RFP gives CHI Memorial every opportunity to remain in that high-value commercial network. They have the same opportunity to pull back on their outrageous requests for higher payments in our other networks, as well.
We hope CHI Memorial will do what’s best for their patients and our members by agreeing to reasonable rates. And if CHI Memorial ultimately decides to leave any of our networks, we’ll help you find new providers who can give you the care you need at better prices.
Scott Pierce, BCBST Executive Vice President and Chief Operating Officer
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CHI Memorial is focused first and foremost on the needs of our patients and our ability to sustain critical services for our communities. Over the last several months, CHI Memorial has been working in good faith with BCBST to accomplish this. We have every intention of reaching a fair agreement before our current contract expires on June 30, and we hope BCBST shares our goal of preserving patient access.
According to publicly reported data, BCBST’s reimbursement to CHI Memorial is not the highest in the state of Tennessee nor the market of Chattanooga. In fact, BCBST’s reimbursements have not even kept up with inflation over the last several years. We are simply asking BCBST to pay us fairly so we can cope with increasing costs while continuing to provide high-quality, high-value care.
The truth is that hospitals across the state, including CHI Memorial, are struggling with soaring costs. Ours have risen by 30 percent since before the pandemic. That is why 57 percent of Tennessee hospitals have reduced or eliminated services due to current financial realities. BCBST, on the other hand, is sitting on cash reserves of $4.1 billion, including $1.4 billion more than required by the state insurance commission, so we know they are able to provide this relief without raising costs for employers. Declines in utilization during the pandemic allowed BCBST to accumulate higher reserves – reserves that could be used to help hospitals in Tennessee, like CHI Memorial, who are still struggling from the aftermath of the pandemic.
The Truth about CHI Memorial’s Community Benefit
Despite substantial financial challenges, we continue our charitable mission. CHI Memorial invested $100 million in community benefits and unpaid Medicare and Medicaid in Tennessee and Georgia in fiscal year 2023, offering free, subsidized, and reduced-cost health care programs for the most vulnerable in our communities. We continue to provide this support while offering competitive rates to payers and being nationally recognized for our quality, safety and service through awards like Centers for Medicare and Medicaid Services 5 Stars, Leapfrog A rating, and U.S. News and World Report - Region’s Best Hospital.
CHI Memorial remains committed to negotiating in good faith to reach an agreement that puts patient needs first and enables residents in Tennessee and Georgia to continue accessing the care they know and trust.
Karen Long
CHI Memorial Communications Manager