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Rate clash between Regence BlueCross BlueShield, Providence could affect 260,000

Regence is taking a reimbursement dispute public, saying its members could be deemed out-of-network starting early next year
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Providence Portland Medical Center. | M.O. STEVENS/CC BY 3.0/WIKIMEDIA
December 4, 2023

This article has been updated with additional information from the Division of  Financial Regulation. 

Insurer Regence BlueCross BlueShield of Oregon is going public with complaints that Providence Health & Services is seeking double-digit price hikes that would be felt by patients around Oregon.

And if the two don’t come to an agreement, Providence, Oregon’s largest hospital system, could stop honoring Regence insurance on Jan. 15 for people covered by plans through their employers and on Feb. 15 for people who use the insurer's Medicare Advantage plans. 

That means people on Regence insurance seeing Providence providers could lose access to their normal providers or find themselves subject to hefty charges for seeing providers who are considered out-of-network by Regence.  

Regence sent an email to employers on Dec. 1 about the dispute and posted a website announcement on Dec. 4. Meanwhile, the final day of Medicare open enrollment, Dec 7, looms.

Regence, in its announcement, contends it is taking “a stand” against higher health care costs and proposed rate hikes by Providence that the insurer called “unprecedented.”

To The Lund Report, Providence responded that it is merely seeking “fair and equitable” increases so employees receive fair wages.

As of September 30, Regence covered roughly 67,000 Oregonians through its Medicare Advantage plans, according to third quarter figures from the Oregon Division of Financial Regulation. It also covered 197,370 Oregonians in the commercial market, private coverage that is typically obtained through an employer that also includes plans covering individuals, according to the same figures.

Providence, meanwhile, operates eight hospitals and 90 clinics in Oregon, as well as surgery centers and home health services that Regence said its members could lose access to. 

The dispute amounts to the latest example in which major health care players in Oregon are taking their case to the public —at times leading to public messaging that appears designed to influence contract negotiations behind closed doors  Already, St. Charles Health’s tensions with Medicare Advantage insurers went public, sparking concerns among advocates for the elderly before a contract with PacificSource was announced. More recently, tensions between Aetna and Oregon Health & Science University went public before a deal was eventually reached.

Of all of those, Regence’s is the most aggressive public pitch yet. It’s consistent with the insurer's marketing, including a Nov. 10 post on its website saying the insurer is “taking a stand for our members and all health care consumers.”

The public disputes reflect increased tensions between health systems and other providers who saw major increases in underlying costs during the pandemic but who often recorded losses as they faced delays in negotiating reimbursement increases, including from government programs such as Medicaid and Medicare.

In other words, health care costs from the past several years are now being passed on to consumers and other payers.

The public disputes also take another toll on consumers. Advocates for the elderly have expressed concern for the effects of such public contract disputes, especially in the Medicare Advantage space where seniors may already face confusion as well as a deluge of sales calls making pitches that may be misleading or worse. (People needing help with Medicare are encouraged to call consumer advocates at the state's independent Oregon Senior Health Insurance Benefits Assistance (SHIBA) program: 800-722-4134, option 2.)

People who enroll in Medicare Advantage plans are not allowed to switch plans if there is a change to its provider network unless federal regulators determine that a significant population has been affected, Jason Horton, Division of Financial Regulation spokesperson, told The Lund Report in an email.   

Negotiations continue 

The two companies are among the larger players in Oregon’s health care landscape. Providence is a part of a Renton-based system.

Both sides told The Lund Report they have a longstanding relationship with each other and still hope to reach a deal.

During labor upheavals in health care and other sectors that marked 2023, Providence saw its Oregon nurses and other workers secure significant wage increases. Providence also offers its own health insurance plans that have become increasingly expensive.

Providence responded to Regence’s announcement with a statement to The Lund Report indicating that it’s “working tirelessly to combat rising costs” but needs help from partners to “keep local care sustainable.” The statement cited financial losses since the pandemic along with a 19% increase in health care costs between 2020 and 2022 that includes pharmaceutical drug prices, supplies and pay for adequate staffing. 

“We are asking Regence for a fair and equitable increase in our reimbursement rate to help ensure our caregivers continue to receive pay consistent with the market,” reads Providence’s statement. “Failure to account for these costs affects our ability to adequately pay the dedicated individuals who work in our clinics and hospitals – from nurses and technicians to environmental services teams and pharmacy staff. “

Regence bases its premiums on what it expects care to cost and that higher provider prices will affect patients, according to a statement from the insurer. 

The email from Regence states that while it has a longstanding partnership with Providence, the insurer is taking a “stand against this unprecedented demand.”

“This double-digit demand from Providence is inconsistent with containing health care costs for Oregonians,” reads the insurer’s email to employers. 

Regence’s statements argued that Providence’s price hike ran contrary to the state’s goal of keeping per capita health care costs from rising above 3.4% annually. Oregon was already exceeding the target before the pandemic, according to a state report. Lawmakers approved a bill last legislative session that modified the state program, exempting pay to frontline workers from the target that will be applied to the industry. 

Regence is seeking to strike “a balance between provider reimbursement rates and the need to help control health care costs,” according to the statement. 

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