Anthem and Bon Secours Mercy can't agree on reimbursement rates. Why are Medicaid and Medicare patients losing coverage?

A growing number of older adults and low-income individuals are losing health insurance coverage because of a reimbursement rate dispute between Anthem Blue Cross Blue Shield plans and Cincinnati-based Bon Secours Mercy Health. 

The crux of the argument is business as usual in the world of payer-provider contract negotiations: tensions after a health system requested higher reimbursement rates from a health plan to meet rising costs. But what is unusual is the loss of health coverage for tens of thousands of Medicaid and Medicare beneficiaries amid those negotiations.

"It's not only uncommon, I've never seen it done to this extent," Jordan Vidor, vice president of provider networks for Elevance Health's east region, told Becker's. "It is absolutely not something that should become a standard practice and is quite dangerous." 

Elevance Health is the parent company for 14 Anthem Blue Cross Blue Shield plans. Since Aug. 1, nearly 50,000 Anthem Medicaid beneficiaries in Ohio and 11,000 Anthem Medicare Advantage members in Virginia have not had access to Bon Secours Mercy facilities. Anthem's Medicaid plan in Virginia and Medicare Advantage members in Ohio and Kentucky will be out of network with a majority of BSMH facilities by October.

Commercial, Medicaid and Medicare contracts between the organizations were set to expire at the end of 2024, but BSMH wrote on its website that "current reimbursement rates from Anthem have not kept pace with rising costs of labor, supplies and medications," leading it to drop Anthem Medicaid and Medicare members. Negotiations started about a year ago and Mercy says they have now stalled entirely. 

"We take a holistic approach to our payer relationships and negotiate across all of our agreements with Elevance," a Bon Secours Mercy spokesperson told Becker's in August. "We exist to care for every patient that comes to the door and our goal is to not limit access to care in any way." The spokesperson said the health system is seeking higher reimbursement rates from all Anthem plans besides Medicaid.

Bon Secours Mercy has encouraged Medicaid enrollees to switch from Anthem Medicaid. In July, it asked Ohio's Medicaid program to reassign Anthem's Medicaid members to other managed care plans, create a special open enrollment period and freeze enrollment with Anthem Medicaid plans, the Toledo Blade reported July 26.

In a letter to Bon Secours Mercy COO Don Kline, Ohio Medicaid Director Maureen Corcoran, MSN, denied the request and said the program "will not use its members as an incentive to force a resolution to that commercial, non-Medicaid disagreement." 

"I strongly encourage BSMH and Anthem to put their business dispute on another track and leave individuals served by Ohio Medicaid out of it going forward," Ms. Corcoran said.

Instead of resuming negotiations, BSMH said Elevance has increased "egregious behavior" against the health system and its employees, who receive their own health insurance through Anthem. Mercy also said Anthem plans owe it more than $100 million in late and unpaid claims.

In response to the new allegations from BSMH, which include an uptick in claims audits against the system, Mr. Vidor with Elevance said the statements are a "patent attempt to distract from what Bon Secours has done and the real issue at hand."

"Inflation and labor shortages are real economic factors that have impacted the delivery space," he said. "While I do think that negotiations between payers and providers have been strained and quite newsworthy throughout the last few years, our organization has had strong success in finding more creative and value-based earning opportunities for providers to add new revenue to the system."

Mr. Vidor said Elevance is "steadfast" in its position with BSMH because it does not "want to allow this to become a standard practice in the industry." He noted that Elevance has been in contact with CMS and Ohio Medicaid over the issue.

Bon Secours Mercy is still contracted with six Medicaid managed care plans in Ohio. There are also some exceptions to the coverage terminations with Anthem, such as continuity of care cases and other medical emergencies that will allow patients to still access Mercy facilities.

"It's unfortunate that this is the current situation; however, we promise to continue doing our part and work hard, in good faith, to reach a new agreement with Elevance Health with a clear understanding that it takes two parties working hand in hand to reach a resolution," BSMH told Becker's in a statement.

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