Negotiations between LifeWise Health Plan of Oregon and one of the state’s largest hospital chains have stalled, spurring LifeWise to accuse Legacy Health Systems of unfairly jacking up rates.
A Legacy spokesman disputed the claims.
Talks began in December to renew a hospital reimbursement contract that expires at the end of March. If the two sides do not come to terms, Oregonians insured by LifeWise will pay out-of-network rates for care at Legacy hospitals and clinics.
Legacy has asked for a 9 percent increase in reimbursements, at a time when most hospitals are asking for 6 percent to 6.5 percent reimbursements, said Richard Maturi, senior vice president for health care delivery systems at LifeWise parent Premera.
Legacy spokesman Brian Terrett said LifeWise has paid low rates that do not reflect the cost of hospital care.
“We have negotiated in good faith with LifeWise and tried to show them specifically that the costs we’re talking about are supported,” Terrett said.
Maturi said that his company’s calculations suggest Legacy is inflating its charges to insurance companies in order to make up for inadequate Medicare reimbursements and unpaid bills left by the uninsured.
Hospitals have long complained that Medicare and uncompensated care eat into operating profits. Most acknowledge that it results in a cost shift in which insurance companies are charged more than the cost of care, in order to avoid losses.
LifeWise claims Legacy has charged the insurer about 31 percent more than the actual cost of medical care.
Legacy disputed those conclusions, and said it is actively trying to rein in costs.
LifeWise insures about 75,000 people in Oregon, and is the state’s seventh-largest health insurer. It has reported losses for several consecutive years, continuing through the first three quarters of 2009.
Legacy has five hospitals across Oregon and Southwest Washington. Operating margins at Legacy hospitals ranged from 1.39 percent to 11.04 percent in 2008.