UPDATE: This story has been updated with comments from Salem Health spokeswoman Lisa Wood.
Thousands of people insured through Regence will have to pay more to get care at Salem Health hospitals and clinics starting Wednesday, the insurance company announced.
The health system will be out-of-network on Jan. 1 for Regence BlueCross BlueShield members after the insurance company and Salem’s only hospital system failed to agree on a new contract.
Negotiations continued up until the Dec. 31 deadline to agree on a new contract, and Regence confirmed the split in a statement emailed to Salem Reporter Tuesday afternoon. The major point of tension was how much the insurance company would pay Salem Health to care for patients.
“We could not in good faith agree to Salem Health’s unrealistic demands of what we estimate is a 35% increase in what we pay them for our members’ care. Such an increase would have put significant financial pressure on our members and local businesses,” Regence spokesman Dean Johnson said in the statement.
In an emailed statement Jan. 2, Salem Health spokeswoman Lisa Wood said the insurance company “refused to agree to the fair market terms.”
“We are deeply disappointed that Regence has chosen to place its business strategy of underpaying providers while posting huge profits over the best interest of its members,” Wood said.
Wood said Salem Health has reached agreements with all other major insurance companies despite shared issues of inflation and rising labor and supply costs.
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, Dr. Zak Ramadan-Jradi, Regence’s vice president of network management, said to Salem Reporter in October.
The contract between Regence and Salem Health was established in 2006 and last amended in 2022 to establish rates for the next two years, said Salem Health spokeswoman Lisa Wood told Salem Reporter in October.
In addition to operating Salem’s only hospital, Salem Health operates West Valley Hospital in Dallas, urgent care centers in Salem and Woodburn, eight primary care clinics, a lab and other specialty medical offices. The health system is a nonprofit, governed by a board of directors in Salem.
The health system has grown in recent years, absorbing several physician groups including the former Hope Orthopedics clinic and Willamette Urology.
Regence patients will pay more out-of-pocket for care at Salem Health, which is now out of network. Federal law protects patients from paying out-of-network prices for emergency care, including airlifts.
Other nearby hospitals, including Santiam Hospital in Stayton and Legacy in Silverton, remain in-network for Regence patients.
Salem Health sought a 35% increase in the amount it billed Regence for surgeries and hospital visits. Hospital leaders said that’s necessary to keep up with inflation and the increasing insurance costs for patients that were not reaching health care providers.
Regence did not share a specific figure it sought, but referenced the state’s 3.4% Health Care Cost Growth Target figure in an Oct. 4 blog post.
Negotiations appeared stalled for months, with publicly-facing positions unchanged. In a Dec. 2 blog post titled “How much is enough?” Regence again referenced the state figure. Johnson did not provide the figure for their final proposed increase in response to questions from Salem Reporter Tuesday.
“We are not negotiating with Salem Health’s doctors or nurses. We are negotiating with their hospital system administrators. We are asking them to put the people of Oregon over the profits and growth of their corporation and come to the conversation with a reasonable and realistic offer,” the post said.
In a rebuttal blog post on Dec. 6, Salem Health said Regence was misleading its members about negotiations.
“If Regence was negotiating with the best interests of their members in mind, they wouldn’t wait to reach agreement with Providence and Legacy until the very last day of the contract,” Salem Health’s post said.
The post noted that Salem’s dispute came the same year that Regence threatened to split with both Legacy Health and Providence hospitals in Portland over contract disputes before settling. The Portland contracts were settled earlier this year.
In October, James Parr, chief financial officer at Salem Health, told Salem Reporter there was a huge gap between the parties.
Parr said that in the past year, Regence has increased the premiums they charge people for insurance, while growth of payments to the hospital remained 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.
“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.
Regence’s customer service team is available by calling the number on the back of the insurance card to speak to a representative.
“Our customer service team is standing by to help our members navigate to in-network services with providers that value high-quality, affordable care. Our clinical team is also working to support members that may be eligible for continuation of care,” Johnson said in the statement.
“If Salem Health leadership is willing to come back to the table with a reasonable proposal, we will continue to negotiate in hopes of bringing them back in-network for the patients and members we jointly serve,” Johnson said.
Contact reporter Abbey McDonald: [email protected] or 503-575-1251.
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Abbey McDonald joined the Salem Reporter in 2022. She previously worked as the business reporter at The Astorian, where she covered labor issues, health care and social services. A University of Oregon grad, she has also reported for the Malheur Enterprise, The News-Review and Willamette Week.
