This article was published in The Portland Business Journal on Mar. 12, 2024.
Regence submits 'best and final' offer to Legacy as deadline looms in contract talks
By Elizabeth Hayes – Staff Reporter, Portland Business Journal
Mar 12, 2024
Regence BlueCross BlueShield has submitted its “best and final offer” to Legacy Health for their contract renewal, raising the distinct possibility that 200,000 of the plan’s enrollees will find their Legacy providers are out of network starting April 1.
The two sides apparently remain far apart on reimbursement rates.
Regence said Legacy’s requested rates would cost $41 million per year and that health care costs for an average employer with Regence insurance would rise by more than $500,000.
“When we offered an agreement that would pay Legacy financial incentives to meet quality standards, they said no,” Regence said in a message to members posted on its website over the weekend. “When we met their request for Medicare reimbursement to settle the Medicare contract, they refused. And then they came back to us just last week demanding even more money to continue serving Regence members.”
Regence said it’s “now up to Legacy’s leadership whether its doctors and facilities will remain in network” for commercial and Medicare Advantage plans. But Legacy said the problem is that Regence has walked away from the table.
“From our perspective, any time you’re in this situation, best and final means one side is not interested in negotiating or compromising anymore,” Merrin Permut, chief population health officer at Legacy, said in a Tuesday interview. “We feel this is highly unusual for a health plan to do this, particularly when we’re three weeks out from the termination date.”
Legacy owns and operates seven hospitals in the Portland metro area. The system lost $172 million in the 2023 fiscal year.
Regence is Legacy’s largest commercial insurance payer. The Portland-based insurer is the second-largest commercial health plan in the state, with 430,000 members and an 11.5% market share.
“We’re deeply disappointed in this approach to negotiating,” Permut said. “They’re putting their profits over our shared patients. They’ve had consistent profits and margins over the last couple of years, and with $1 billion in reserves, Regence can pay their fair share and are choosing not to.”
Permut declined to say how much of an increase Legacy is seeking, but she said the amount is in line with other hospital systems.
“We’re asking for reimbursement that brings us parity with other systems and from other health insurance companies and that acknowledges the increase in expenses,” she said.
Permut said Legacy has never lost a major insurance plan before. Last year, the health system completed negotiations with three major payers last year.
“We remain at the table,” she said. “We’re committed to staying and continuing the conversation."