Salem Health seeks 35% increase from Regence in insurance coverage dispute

Thousands in Salem may not be able to get in-network care at Salem Health next year due to a contract dispute between the hospital system and insurance company Regence BlueCross BlueShield.

Both sides say the disagreement, centered around how much the insurance company pays Salem Health to care for patients, may be insurmountable. 

Salem Health is seeking a 35% increase in the amount it bills Regence when members go to the emergency room or have surgery at Salem’s only hospital.

Hospital leaders said that’s necessary to keep up with inflation, while Regence said it would drastically raise premiums for members.

If a deal isn’t settled, Regence patients would pay more out-of-pocket for appointments, surgeries and care at Salem Health’s hospitals and clinics.

Federal law protects patients from paying out-of-network prices for emergency care, including airlifts.

Many patients received their first notice of the dispute in their mailboxes over the weekend: a letter from Salem Health CEO Cheryl Wolfe letting them know that at the end of the calendar year, if an agreement can not be made, “you will likely be responsible for a greater portion of the costs of your care at Salem Health Hospitals and Clinics.”

About 30,000 people in Marion and Polk counties are insured through Regence, and about a third of them use Salem Health on a regular basis, according to Dr. Zak Ramadan-Jradi, Regence’s vice president of network management.

Salem Health’s existing contract with Regence will expire on Dec. 31. A new contract would require that the hospital and insurance company agree on terms which would set the amounts the insurer pays.

Salem’s dispute comes the same year as Regence threatened to split with both Legacy Health and Providence hospitals in Portland over contract disputes before settling, and as hospitals and insurers nationwide butt heads over inflationary rates. The Portland contracts were settled earlier this year.

James Parr, chief financial officer at Salem Health, said negotiations with Regence have stalled as of early October.

“There is a huge gap between what Salem Health is requesting and what Regence says they want to pay,” Parr said. 

Parr said that they have secured contracts with every other insurance provider in Marion and Polk Counties.

“If every insurance company treated us the way that Regence treats us, I don’t think we’d be able to continue to provide health care the way we do in our community,” he said.

Parr said Regence is offering a 3.4% increase, aligned with the state’s 3.4% Health Care Cost Growth Target which aims to prevent health care costs from outpacing wage growth.

Regence did not share a specific figure it’s seeking, but referenced the state figure in an Oct. 4 blog post.

“We’ve offered Salem Health reasonable, fair market rates that strike a balance between provider reimbursements and the need to help control health care costs for our members and customers. Our offer is inline with Oregon’s Cost Growth target and includes additional compensation if they achieve quality and performance targets,” said Ramadan-Jradi in an emailed statement to Salem Reporter.

Parr said that in the past year, Regence has increased the premiums they charge people for insurance, while growth of payments to the hospital remains stagnant.

According to state data, Regence has requested a 9.3% premium increase for individual patients starting in 2025 and a 13.6% increase for small groups. With those increases, a 40-year-old man in the Portland area would pay $555 monthly for an individual health insurance plan, and a small business would pay $459.

That data shows prices for people and small businesses who buy insurance through a health care marketplace, and don’t include the premiums paid by larger employers.

“It’s a challenging statement to say ‘We’re holding everybody to 3.4%’ and clearly they’ve increased their premiums 10 times that amount just in the last few years,” Parr said. 

Salem Health is asking for a 35% increase in payment from Regence, a significant amount which Parr said they’re not asking from any other insurance company. He said it’s due to inflation costs to providing health care since the pandemic.

“Since then, other insurance companies have given us health care inflationary increases really reflecting what the cost of hospital care, cost primarily of wages, etcetera have increased since then. Regence have not,” he said.

He said Regence has refused to negotiate a contract until this point, and they are years behind inflationary costs.

The contract, established in 2006, was last amended in 2022 to establish rates for the next two years, said Salem Health Spokeswoman Lisa Wood in an email to Salem Reporter.

In 2019, the two settled after a public-facing dispute which included Regence taking out a full-page advertisement in Sunday’s Statesman-Journal saying that “Salem Health is asking for a bigger raise than you can afford.”

Ramadan-Jradi said that after entering a multi-year contract, “you don’t want to sit down at the table every nine months to negotiate for three months. It’s not sustainable.”

Ramadan-Jradi said it’s a normal course of business for the health care provider to want to terminate the contract. He said many hospital systems will begin the conversation by invoking a termination rather than starting with demands.

“Unfortunately, by applying this strategy on the provider side is causing what I call an unnecessary and unfair anxiety among the members because they get letters,” he said.

Ramadan-Jradi said Regence is seeking affordable rates for its members, because any increases will be passed on in premiums.

“When I look at the negotiation, where we need to be, I look at the member, look at the patient, I look at the affordability and I look at the quality and cost of the contract,” he said. 

Ramadan-Jradi said the ball is in Salem Health’s court, and that Regence’s ask is not unreasonable.

“We did send them a proposal, we have not heard back what the counter-proposal might look like,” he said. “We are very far apart, to be very frank with you.”

Ramadan-Jradi said it’s his priority to form a contract and a deal with Salem. He said they will continue to request a “reasonable proposal” from Salem Health. 

“It is not our strategy to not have Salem Hospital in our network,” he said.

Parr said that negotiating with Regence is a high priority, and he wants to move talks forward.

“We have, up until this point, been proactively reaching out. We’ve reached this stalemate now where Regence won’t move off a rate which doesn’t in any way reflect what others are paying. So we’re kind of in a holding pattern,” he said. “I have a team ready to start negotiating now… If Regence wants to come and start negotiating, we’re ready and willing.”

The stalemate means it may be over a month before Regence patients have a clearer picture on the future of their health care coverage.

Ramadan-Jradi said they will be required to notify members by mid-November if the contract will be terminated. For questions about coverage, he recommended calling the number on the back of the insurance card to speak to a representative.

CORRECTION: This story as been updated to clarify that Salem Health and Regence last updated their contract and rates in 2022, not 2019. Salem Reporter apologizes for the error.

Contact reporter Abbey McDonald: [email protected] or 503-575-1251.

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