FirstHealth, Insurer Can Work This Out

When FirstHealth of the Carolinas’ decision to cancel its medical insurance contract with Blue Cross and Blue Shield of North Carolina became public last month, thousands of Blue Cross policy holders in Moore, Montgomery and Richmond counties felt as though they were being ambushed. That’s understandable. It probably seemed to many of the policy holders that two corporate health-care giants were engaged in a showdown that was more about money than about patients. People were left to wonder if hospital care and health insurance coverage would be available to them in the future.

Those are the people — along with the employers through which most of them are insured — that FirstHealth and Blue Cross should keep uppermost in their minds, now that the two sides have agreed to sit down at the negotiating table and attempt to agree on new rates of reimbursement by the insurance carrier to the hospitals. FirstHealth has rescinded its cancellation notice — at least for the time being — and the goal is to reach an agreement by Oct. 31.

The situation didn’t have to reach the point of causing so much anxiety to Blue Cross policy holders. It seems that a new set of rates could have been worked out quietly. FirstHealth says that was done recently with other insurance carriers but that Blue Cross has a way of ignoring or dawdling over hospital requests to negotiate new rates. Besides, FirstHealth contended, there are — contrary to popular belief — plenty of other medical insurance options available to its patients. Blue Cross said it was under no ethical obligation to renegotiate a contract that the two sides previously agreed upon in good faith. And once it received the cancellation notice, Blue Cross took the corporate-macho position that it does not renegotiate contracts under threat of cancellation. FirstHealth said the notice of cancellation was required to get the attention of Blue Cross. And apparently it did.

A reasonable increase in reimbursements seems in order. FirstHealth says it has received essentially no reimbursement hikes over the past five years, while the cost of providing hospital care to patients has risen significantly. At the same time, Blue Cross premiums have gone up 17 percent per year, and the insurer’s profits have quadrupled. Blue Cross doesn’t dispute those figures. Blue Cross is, on paper at least, a non-profit organization, but nonprofit. (Blue Cross is in the process of trying to gain state authorization to convert to for-profit status.)

FirstHealth has requested a 12 percent to 15 percent increase in reimbursements from Blue Cross. Given the costs being incurred by FirstHealth, the excellent quality of its care, and the premiums and profits of Blue Cross, an increase in that neighborhood seems a good starting point for negotiations.