PORTLAND, Ore. — Legacy Health will end its contract with insurance provider Regence BlueCross BlueShield on March 31 unless the two can negotiate a new contract beforehand, according to a statement put out by the hospital system on Tuesday.
The contract determines how much Legacy Health gets reimbursed for health care services. According to Legacy Health, Regence's reimbursement rate has "failed to keep pace" amid inflation and rising labor costs since the COVID-19 pandemic hit.
"Legacy Health cares for Regence members who deserve to receive quality and financially sustainable care close to home," said Merrin Permut, Legacy vice president and chief population health officer. "Regence has been an essential partner for decades, and we remain hopeful. We’re asking Regence to support an increase that reflects the economic realities in health care today so that all of us can focus on our top priority — the well-being of their members and our patients."
Legacy Health said that its expenses rose by 24% in just two years, and the health care provider claimed that Regence is on firm financial footing to shell out for a rate increase.
"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," Permut said. "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."
According to Legacy, the hospital system informed Regence almost a year ago that it should "expect a significant rate increase" in the forthcoming contract. The notice of termination will give the two parties another three months to negotiate without the contract automatically renewing on current terms.
But if the two sides don't reach a deal by March 31, Legacy will no longer be in-network for Regence members, with the exception of emergency care. Legacy Silverton Medical Center and nearby clinics are another exception, since they operate under a separate agreement with Regence.
In a statement, Regence said that is was disappointed that Legacy "elected to prematurely go public" with contract negotiations, which it said are actively continuing:
"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.
"We advocate on behalf of our members, and they depend on us to be a strong advocate. This includes holding the line and standing up to health system leaders who demand historical and unreasonable increases that far exceed inflation. Our members rely on us to pay their medical claims in good times and bad. Maintaining financial stability is essential to keeping our promise.
"As a nonprofit health plan, we reflect cost drivers in the health care system, and hospitals are the largest driver of U.S. health care spending. We value the care Legacy doctors, nurses and medical staff provide our members and acknowledge it will take collaborative solutions to address the rising costs of health care; however, this burden shouldn’t fall to our members and local Oregon employers.
"As businesses serving the local community, Regence and Legacy are responsible for balancing provider reimbursement rates with the need to help control health care costs to ensure continued access to high-quality, affordable health care. We are actively working to reach an agreement with Legacy’s leadership that strikes that balance.
"We remain hopeful we can reach an agreement that avoids any network disruption.”
Late last year, a similar contract dispute between Providence and Regence nearly pushed 260,000 people out-of-network. The two parties reached a last-minute deal in January for a new contract.
Legacy Health is in the process of merging with OHSU as the former undergoes significant post-pandemic financial struggles, according to reporting from the Portland Business Journal. OHSU is the largest health system in the Portland metro area, with more than 19,000 local employees as of 2022; Legacy is the second-largest, employing some 13,000 people.
