Illinois Blues refusal to negotiate with affiliated health systems could have 'chilling effect'

Blue Cross Blue Shield of Illinois is taking a stand against the recent uptick in hospital affiliations. The market-dominating insurer recently announced that it won't negotiate reimbursement rates with affiliated health systems, Crain's Chicago Business reported.

The move comes after the state's largest hospital network, Advocate Health Care, announced an affiliation with Silver Cross Hospital, an independent single hospital. The affiliation was meant to allow the hospitals to jointly negotiate reimbursement rates with Blue Cross and other insurers. Given that Advocate Health Care and NorthShore University HealthSystem are planning a merger to create a 16-hospital, $6.8 billion system, the providers would have been in a strong position to force Blue Cross into higher payments.

But with the new Blue Cross policy, the insurer won't engage in reimbursement negotiations with affiliations of separate health systems that don't actually establish a common ownership, Lee Sacks, chief medical officer of Advocate, told CCB.

"If the Blues aren't going to recognize (the affiliations), that's really going to have a chilling effect on everybody's non-merger kind of relationship," Advocate CEO Jim Skogsbergh said.

Blue Cross communicated its new policy with other hospital systems throughout the state. "While we support clinical integration arrangements to better coordinate patient care, optimize the sharing of clinical information, and working toward the industry's triple aim ... we do not believe joint fee negotiation by hospitals is necessary to achieve these results," Blue Cross spokesperson Mike Deering said in a statement, CCB noted.

As the trend toward hospital mergers and acquisitions continues, America's Health Insurance Plans has been pushing back against consolidation, saying it jeopardizes insurers' attempts to move toward a value-based reimbursement system, FierceHealthPayer previously reported.

To learn more:
- read the Crain's Chicago Business article

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