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Dispute could push hospital, doctors out of network for BlueCross holders

The negotiation impasse between South Nassau Communities Hospital and Empire BlueCross BlueShield centers around reimbursement levels for services provided by the hospital and doctors in its system. 

South Nassau Communities Hospital is in a contract

South Nassau Communities Hospital is in a contract dispute with Empire BlueCross BlueShield.   Photo Credit: Newsday / J. Conrad Williams Jr.

A negotiation impasse between Empire BlueCross BlueShield and South Nassau Communities Hospital could push the hospital, along with doctors in the system, out of network for patients covered by the insurer.

The contract between the Oceanside-based hospital and Empire BlueCross expired on May 1, and if a deal isn’t reached after a 60-day cooling-off period, patients receiving non-emergency care beginning July 1 could be forced to find alternative means for care or pay for out-of-network expenses.

Emergency care would remain covered, the hospital said.

The contract covers the payments the hospital receives from the insurer for its services.

“Our contract rate compared to other hospitals in the area is as much as 40 percent lower,” said Richard Murphy, president and chief executive at South Nassau. “Being 40 percent behind some of our competitors puts us behind when it comes to competing for physicians, nurses, support staff, because it obviously impacts our ability to pay competitive wages.”

The hospital said that because it’s in an active negotiation, it couldn’t comment on which Nassau County hospitals it was referring to or how much BlueCross paid it for services.

Hospital officials said they don't have an exact number for how many patients would be affected, but spokesman Joe Calderone said Monday it would likely be "in the tens of thousands."

In a statement, BlueCross said “there is no immediate change to health care coverage for our consumers as we are continuing to negotiate to reach an agreement that would enable South Nassau Communities Hospital to remain part of Empire’s care provider network and protects affordability for our consumers.”

The insurer added that its customer service representatives would provide consumers with information. The customer service phone number is listed on the consumers’ ID card.

Hospitals and insurers are increasingly taking tougher negotiating stands as profit margins thin in both sectors, said Paul Keckley, a health care analyst in Washington, D.C., and Nashville.

“Both sides are looking for more sources of revenue,” Keckley said. “The pressure is also why you’re seeing health insurance and hospital mergers and acquisitions.”

The increase in the number of Medicare and Medicaid participants is also tightening hospital revenue, because “it’s substantially less than the margin on a patient covered by commercial payers.

“But in the end, the hospital and the health insurer need each other, so after the threatening letters, and a long negotiation, they figure it out,” Keckley said.

South Nassau said it recently reached deals with BlueCross competitors Cigna and UnitedHealthcare. The hospital called those contracts fair, saying they provide it with “adequate reimbursement for the hospital’s services. BlueCross refuses to do so.”

South Nassau is in the process of joining the much larger Mount Sinai Health System, but final approval on that deal won’t take place before later this year, so South Nassau is negotiating a stand-alone deal with BlueCross.

Hospitals regionally and nationally have joined larger health systems, in part, because being part of a larger network gives them stronger negotiating power. In the last year locally, John T. Mather Memorial Hospital in Port Jefferson joined Northwell Health, while Southampton Hospital joined Stony Brook Medicine.

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