CommonSpirit’s CHI St. Luke’s settles Blue Cross Blue Shield contract dispute

CommonSpirit’s CHI St. Luke’s on Friday reached a new contract agreement with Blue Cross and Blue Shield of Texas, ending a dispute that could have prevented 65,000 patients on those plans from accessing its hospitals.

Houston-based CHI St. Luke’s had pushed BCBSTX for a price increase in the middle of its current contract, which expires at the end of 2021. The health system threatened to take its 16 Texas hospitals out-of-network for Blue Cross and Blue Shield by Dec. 16 if the two companies didn’t reach an agreement.

“As this new agreement goes into effect, our focus remains where it has always been—on patients,” St. Luke’s Health President Douglas Lawson said in a statement. “We’re eager to continue working with those BCBSTX customers who have remained under our care, and to working with those who find themselves in need of hospital-based care in the future.”

The new contract went into effect immediately. In October, Lawson declined to share the size of the requested price increases when the health system sent termination warnings to BCBSTX and Molina. CHI St. Luke’s went out-of-network for Molina plan holders on Thanksgiving Day.

BCBSTX said the new agreement involved “determined efforts on both sides.”

“We advocated on our members’ behalf to keep health care prices affordable, particularly during a global pandemic when access to care is critical,” said Shara McClure, senior vice president of Texas healthcare delivery for BCBSTX, in a statement.

At the time of the termination notice, McClure said 60% of its members were self-insured, and employers would bear the costs of the higher rates.

CHI St. Luke’s lost $204 million on operations on $2.3 billion in operating revenue in fiscal 2020, which ended June 30, a -9% operating margin. Its parent system, the massive, 137-hospital CommonSpirit, lost $550 million on operations in its fiscal 2020, which ended June 30.

BCBSTX members represented about 10,500 hospitalizations at CHI St. Luke’s and 158,000 outpatient visits during the fiscal year.



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