Confluence Health cancels contract with Premera Blue Cross

WENATCHEE - Confluence Health recently announced that they will not renew their contract with Premera Blue Cross. Effective February 1, 2022 Confluence Health will no longer be an in-network provider for patients who have Premera, Lifewise, and Blue Cross insurance plans. Other plans that are affected include Regence Blue Shield and Uniform Medical Plan.

Andrew Canning, Director of Marketing and Communications at Confluence Health said that the decision not to renew the contract will affect about 36,000 patients in Chelan, Douglas, Okanagan and Grant counties.

According to Dr. Doug Wilson, CEO-elect of Confluence Health, the rates that Premera were willing to provide as reimbursement were so low that they would not allow Confluence to continue providing medical services for everyone in the long term.

“We were worried that we would eventually have to look at trimming down services and that means people in this region would not have access to the kind of good medical care that they really deserve,” he said.

On April 23, Confluence Health notified Premera that it would not renew its current contract. Wilson said that the rates that Premera was willing to provide were much different than what other commercial insurers are paying and the differential reimbursement did not seem fair.
Negotiations about the contract dispute started well before April, Wilson said. Since then, he said they have had several meetings in an attempt to come to an agreement but haven’t made any significant progress.

Courtney Wallace, spokesperson for Premera Blue Cross, said in an email that Premera is paying its fair share.

“The truth is that Confluence is the largest multi-specialty health system in North Central Washington with no true competition within 100 miles. On average, Confluence Health’s hospital costs are higher than all other systems in Eastern Washington,” Wallace said.

Other hospitals in the region have not yet followed suit with any announcements to end their contracts with Premera.
Three Rivers Hospital
Jennifer Best, Business Development Coordinator at Three Rivers Hospital, said that Premera is an in network provider for the hospital and no decisions have been made regarding whether the contract will be renewed.

Lake Chelan Health
Agustin Benegas, Communications Manager for Lake Chelan Health, said in an email: “Lake Chelan Health will soon receive the contract from Premera with a plan to renew; they did not change our rates.”

Cascade Medical Center
Clint Strand, Director of Public Relations at Cascade Medical, said in an email that Premera is an in-network provider at Cascade Medical and a need to discontinue the relationship with Premera has not been identified.

Since Confluence is not renewing its contract with Premera, patients with Premera insurance will be out of network at Confluence and face higher costs of medical care.

Dr. Pete Rutherford, CEO of Confluence Health, said that the costs those with Premera insurance will have to pay once the contract non-renewal is effective depend on the benefit structure that each employer has negotiated with Premera. The change could affect a patient's deductible, co-pays, or co-insurance.

Rutherford said that those with Premera insurance should talk with their employer or insurance broker to get some opinions on which other insurance companies might be able to meet their needs for care.

Because of the impacts of the nonrenewal on patients, Confluence decided to give six months advance notice of the change, Wilson said. The terms Premera was offering after five months of negotiation were far from where they needed to be for Confluence to serve all its patients, he said.

“It became apparent to us, especially in the last month or even back in April,” Wilson said, “that it was unlikely that Premera was going to come to a place where we could, in good conscience, accept the terms.”

Confluence Health is not currently planning any additional negotiating meetings with Premera and the non-renewal decision was made with full support from the Confluence Health Board of Directors.

Wallace said that she did not believe that Premera has reached an impasse in contract negotiations, but acknowledged that there is still a long way to go to make a mutually beneficial agreement. She urged Confluence to return to the negotiations table.

“Despite Confluence’s decision to end the negotiation,” Wallace said, ”we believe it is in the best interest of our customers and the community that we continue these critical conversations as this type of discussion takes time and isn’t a sprint.”

Even though there are no current plans to negotiate with Premera, Rutherford said that Confluence is always willing to discuss and look at possibilities. Canning and Wilson both said that it is common for large insurance companies to have disputes with hospitals regarding insurance negotiations.

“Insurance companies do this all the time,” Wilson said. “It is part of their way of doing business and we know it's hard on patients. But our responsibility as a health care provider is to think long term.”

But some of the financial issues that the hospital faces go beyond the contract non-renewal. Confluence provides care for those who do not have insurance or are underinsured, which comes at a cost to the hospital. Wilson said that Medicaid rates in the region are nowhere near what they should be to cover the actual cost of care.

Rutherford said that reimbursement from commercial insurances has to help cover the cost of providing care to patients who are uninsured or underinsured. Despite the cost to the hospital, he said that Confluence is committed to not turning anyone away, regardless of their insurance situation.

Confluence Health provided $28 million in charity care last year, Wilson said. The cost of charity care is factored into the hospital's cost structure. Those costs become debt for the hospital and take away from investments the hospital could make like hiring people and buying new equipment.

Overall, the non-renewal of the Premera contract goes beyond the terms of negotiation between the two parties and reflects the larger issues that both insurance companies and hospitals face.