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Legacy, Regence rate dispute heats up

The Portland-based health system says it needs more money from Regence to cover increased labor and supply costs
Legacy Health Good Samaritan Medical Center in Northwest Portland, Ore., on July 30, 2023. | JAKE THOMAS/THE LUND REPORT
February 6, 2024

This story has been updated with comment from Regence BlueCross BlueShield. 

Legacy Health is prepared to pull out of Regence BlueCross BlueShield’s provider network at the end of next month if the insurer doesn’t raise reimbursements. 

Legacy went public with the dispute Tuesday with a statement indicating its contract with the large insurer would terminate on March 31 if the two can’t reach an agreement. That would mean Oregonians insured by Regence could no longer receive services at Legacy without out-of-pocket costs, except for emergency care.  

The public dispute is the latest example of a national trend in which hospitals and insurers are increasingly clashing over covering inflationary health care costs. It’s not clear how many Legacy patients would be affected if the two sides don’t settle the dispute.  

The health system, which operates seven hospitals in Oregon and southwest Washington along with 70 clinics, notified Regence 10 months ago of a “significant rate increase” in their next contract, according to the statement. The new contract would not apply to Legacy Silverton Medical Center and other clinics that have separate agreements with Regence. 

“We are seeking reimbursement that is competitive with other health systems in the Portland region and reflects the value and actual cost of care we provide to patients in our communities,” Merrin Permut, Legacy vice president and chief population health officer, said in the statement. “Unfortunately, Regence has not agreed to our current proposal and is not adhering to the timelines they set forth. We are concerned for Regence members who face further anxiety about the potential for disruption of services and reduced access to care.”

Legacy's statement said that Regence's "stable financial foundation makes them well positioned to support care provided at hospitals and clinics with sustainable rates."

Regence spokesperson Dean Johnson responded with a statement to The Lund Report stressing that the insurer was advocating for its members by "holding the line and standing up to health system leaders who demand historical and unreasonable increases that far exceed inflation."

“We continue active negotiations with the leaders of Legacy Health and are disappointed they elected to prematurely go public with our discussions," reads the statement. "This negotiation tactic puts patients in the middle and causes unnecessary stress to Regence customers and members. Legacy’s leaders told Regence that they intend to stop serving our members unless we agree to a double-digit price increase in what we pay them for care."

Regence's statement indicated the insurer remained hopeful it could reach an agreement. 

In the post-pandemic landscape, Legacy has seen inflation along with increased labor and supply costs drive up its expenses by roughly a quarter in the last two years, according to its statement. Regence’s reimbursement rates aren’t keeping up with those costs, the statement said. 

Legacy has struggled with sagging revenue in recent years and has seen unions make unprecedented inroads with its workers seeking better wages and working conditions. The health system is pursuing a merger with Oregon Health & Science University. 

A similar dispute went public late last year, when Regence notified its members that Providence Health & Services was seeking double-digit price hikes that they warned would mean the unraveling of their contract. However, the two came to an agreement in January allowing about 260,000 Oregonians insured by Regence to continue to receive services at Oregon’s largest health care providers. 

Earlier last year, disputes arose and were settled between Oregon Health & Science University and Aetna, and St. Charles Health and several Medicare insurers.

You can reach Jake Thomas at [email protected] or via X @jakethomas2009.