Salem Health ends negotiations with Regence, leaving thousands out-of-network at city’s only hospital

Salem Health is no longer accepting Regence BlueCross BlueShield insurance as of Wednesday, with the health system’s leaders saying negotiations have stalled after another month of discussions.

Without a contract, Regence patients will pay more out-of-pocket for care at Salem’s only hospital and its clinics, which will remain out-of-network for the foreseeable future.

In a blog post on Wednesday, the health care provider asked Regence patients to seek care elsewhere, purchase other insurance, or risk paying thousands in medical bills out-of-pocket.

Regence has been out-of-network since an existing contract with Salem Health expired Dec. 31, but both sides resumed negotiating Jan. 14, leaving some patients hope that the situation would be temporary.

In competing statements Wednesday, executives from both organizations blamed the other side for the stalemate and accused the other of harming patients, while largely repeating talking points from several months of publicly contentious negotiations.

James Parr, chief financial officer at Salem Health, said the decision to walk away came after negotiators from both sides held nearly daily virtual meetings to discuss offers and counter offers over the past month. He said there was little movement.

“The negotiations have ended. This is not a pause or a tactic to drag everyone back to the table. We’ve met 29 times and the negotiations have failed,” he said. “I don’t see the parties getting back together. I think that is extremely remote.”

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.

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, head of network management and strategy at Regence BlueCross BlueShield of Oregon, said in October. 

Salem Reporter spoke to some of those patients last month, who shared their concerns about affording health care, finding new doctors outside of Salem Health’s large presence or the challenges of switching insurance. 

Patients with medical emergencies and some other conditions can still get in-network care at Salem Health under federal law. 

Under the federal No Surprises Act, patients can’t be charged higher than their in-network costs for emergency treatment by the hospital, providers or for an air ambulance. That includes all necessary hospital treatments during the stay.

Stabilizing services after the emergency are covered under law, too. But once someone is physically able to travel to another hospital or clinic for care, they could be charged out-of-network rates if they choose to stay at the out-of-network hospital. Patients are notified before those charges begin.

Regence said it also has over 900 members who qualify for continuity of care under federal law, which allows certain types of patients in-network prices. They include pregnant patients, patients getting specialized care over a long period of time such as radiation therapy, and scheduled non-elective surgeries.

During negotiations, Salem Health had paused its collections of co-pays from Regence patients, and withheld statements. Parr said Salem Health has begun to release bills, but are holding some to see if patient costs can be lowered.

One such bill is for a pregnant woman who was admitted to the hospital to deliver her baby after coming in for high blood pressure. Salem Health officials said she got a bill of over $11,000 after Regence paid its share, but should have only owed $600. Parr said they believe that patient and others should fall under the federal protections and are having lawyers look at such cases — which would mean Regence pays a larger share of the bill.

“This is new territory,” Parr said. “It could be an oversight, or it could be that there’s some piece of this that we don’t understand… and really devastating for that patient.”

Months of negotiations, little compromise

In October, when the dispute first went public, Salem Health was seeking a 35% increase over two years for the amount it bills Regence for patient care, which it said would keep up with inflation, and bring Regence up to par with what other insurers are paying. The original contract ended on Dec. 31.

Over the past month, Salem Health didn’t move far from that figure, which Parr said was already a compromise of about 10% from previous negotiations.

“It is a big increase, but it’s because there hasn’t been the normal inflationary increases for three years,” Parr said. 

Regence indicated it offered a 3.4% increase aligned with the state’s 3.4% Health Care Cost Growth Target. They ultimately offered over 4%, said Ramadan-Jradi.

“We are still at the table. We are willing to continue the conversation and we are, frankly, very disappointed that they have made that decision,” Ramadan-Jradi said.

He said he didn’t have an indication Salem Health executives would walk away from the table until he got a phone call about 20 minutes before the press release went out.

“Based on their behavior, I’m not really surprised they did what they did. Because they want to put pressure on us to bend the cost curve. I’m not going to really cave in on and compromise affordability positions,” he said. 

Regence published a rebuttal to Salem Health’s Wednesday blog post, accusing Salem Health of publishing misinformation.

Among their points, Regence said it had reached agreement on a rate for seniors with Medicare Advantage plans, which Salem Health wouldn’t implement without settling other parts of the contract.

Parr said there’s not a way to have a separate contract for those patients, who represent about a third of the Regence patients in the area. The other two-thirds mostly get the insurance through their employer.

“It’s like trying to sell your house, and you agree on the price of the kitchen. ‘Well, I’ll just buy the kitchen and we’ll figure the rest out.’ It doesn’t work that way,” Parr said. “You can’t renegotiate one piece of the contract and have a huge chasm on the other piece.”

Salem Health, in a letter to Regence patients, reminded Medicare Advantage plan members that they have until March 31 to switch to another insurer for coverage in 2025. 

Regence patients can call customer service using the number on the back of their card for support navigating in-network coverage, Ramadan-Jradi said.

Members seeking copies or a transfer of their Salem Health medical record should call 503-561-5750 or visit Salem Health’s website.

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

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