Blue Cross responds to Steward’s attacks

PROVIDENCE – After enduring two weeks of attacks in what he termed a “distasteful,” “fear-mongering” and “mud-slinging” media campaign from Boston-based for-profit hospital network Steward Health Care, Blue Cross & Blue Shield of Rhode Island President and CEO Peter Andruszkiewicz visited Providence Business News on July 31 to respond and present the health insurer’s point of view.

Steward, in partnership with Landmark Medical Center, the hospital in receivership Steward is seeking to acquire, and United Nurses & Allied Professionals, the union representing workers at Landmark, have sought to pin the blame on the state’s largest health insurer for Landmark’s financial woes.

Together, they bought a series of full-page color advertisements running daily in The Providence Journal and The Woonsocket Call and weekly in the Providence Business News.

The ads, with provocative language claiming: “Blue Cross put Landmark on life support. Now they’re pulling the plug,” were designed and placed by the Boathouse Group in Waltham, Mass., the communications agency that handles Steward’s account. A parallel ad campaign is also running on radio.

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“We are not releasing specific cost information,” Christopher Murphy, Steward spokesman, told the Providence Business News. Based on the frequency and the size of the ad buy, and the published rates for advertising, the price tag for such a media campaign is estimated to cost tens of thousands of dollars.

During his visit, Andruszkiewicz countered point-by-point the claims in the ads. On average, the daily patient census at Landmark’s 214-bed hospital is 100, and of that, on average, 10 are Blue Cross members, according to Andruszkiewicz.

“It’s really hard to imagine how our reimbursement on those 10 patients a day is determinant of whether or not this hospital lives or dies,” said Andruszkiewicz.

In terms of its members’ use of Landmark facilities, Andruszkiewicz continued, 80 percent of the Blue Cross commercial insurance members and 65 percent of the Blue Cross Medicare members who live in the catchment area served by Landmark do not use Landmark. “People get in their car, and drive by Landmark, and go someplace else,” he said. When asked where patients went instead, he answered: “Providence, Boston, Miriam [Hospital] and Memorial [Hospital]. They don’t go to Landmark.”

To the claim that Blue Cross was starving Landmark through low reimbursements, Andruszkiewicz said the exact opposite was true. Over the last 10-year period, he said, Blue Cross had increased its reimbursement rates by 109 percent, or roughly 7 percent a year on a compound basis.

Regarding the hospital’s financial troubles, Andruszkiewicz said that Blue Cross, at the request of Landmark, made advance cash payments in lieu of reimbursement rates increases of $8 million over the last 10 years.

The insurer also made a loan of $2 million to Landmark when it was on the verge of bankruptcy in 2006 and 2007. “Never has a penny of that been repaid,” Andruszkiewicz said. “Rather than the claim of this being the lowest reimbursed hospital, and the claim that they’ve been punished or that we’re deciding which hospitals live or die [in Rhode Island], we would claim exactly the opposite,” he said. “If you look at those cash payments and rates of increases, and put it all as a rate of increase, Landmark would probably be the highest paid community hospital in the network today.”

According to Blue Cross, the combination of annual rate increases and the $8 million in payments result in a 10-year cumulative commercial reimbursement rate increase of 230 percent.

Andruszkiewicz said that Landmark represented just a very small part of the health care delivery system in both Rhode Island and for Blue Cross. “Landmark represents about 3 percent of our total spending on hospital care,” he said. “We spend $800 million a year of our customers’ money on hospital care and less than 3 percent is at Landmark.”

Kim Reingold, Blue Cross spokeswoman, and Michele Lederberg, Blue Cross’s executive vice president and general counsel, accompanied Andruszkiewicz on his visit.
They disputed the ad campaign claim that the health insurer’s letter notifying members that the contract with Landmark was expiring on July 16 and that the hospital may no longer be a member of the Blue Cross network as of Aug. 1 resulted in a dramatic decrease in the scheduling of elective surgeries at Landmark.

Examination of Blue Cross data from previous years for elective surgery showed similar fluctuations around July 4th, summer and holiday schedules, according to the Blue Cross representatives.

Finally, Andruszkiewicz said that in contract negotiations, Blue Cross made multiple contract offers that were ignored or rejected by Steward.

“We got a contract offer from them that was not compliant with the hospital contract conditions set by [R.I. Health Insurance Commissioner] Christopher F. Koller,” he said. “We’re not going to consider any contract that’s not compliant with those conditions.” As recently as this week, he continued, Blue Cross has made another amended offer for a contract that is compliant with OHIC’s conditions. “We don’t want to kill the hospital; in fact, it’s been quite the contrary.”

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