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CHI Memorial wants to be the highest-paid hospital in Tennessee

Key Takeaways

  • CommonSpirit asked for a rate increase of nearly $70 million over 3 years, which would make CHI Memorial the most expensive hospital system in the state.
  • We’re disappointed in CHI Memorial as a partner, and their pattern of behavior has led us to re-evaluate our working relationship. One result is that we’re considering new options for their spot in Blue Network S.
  • Despite our concerns, we recognize many of our Chattanooga members value the care they receive at CHI Memorial. So, we’re giving CHI Memorial every opportunity to remain in our networks by prioritizing affordability for our customers.
  • Our current agreement keeps CHI Memorial in all our networks through June 30, 2024, so our members can continue getting services with in-network benefits.

Some Chattanooga residents may remember contract negotiations between BlueCross BlueShield of Tennessee and CHI Memorial in 2021. It was the height of the COVID-19 pandemic, and the uncertainty caused a lot of stress for our members.  

We knew our members needed care at CHI Memorial, so after extensive negotiations, we agreed to pay higher rates. This unfortunately increased costs for those we serve, but it was the only way to limit the disruption during a pandemic.  

Almost every hospital system we work with has an “evergreen” contract, or one without a specific end date. We like this approach because it gives peace of mind to members who can count on access to care with their preferred provider. But in our 2021 agreement, CHI Memorial insisted on a “hard termination” of that agreement, set for June 30, 2024. We knew what was coming: another push for more money. 

That’s exactly what we got starting last May – less than two years after signing a new agreement. CHI Memorial began knocking on BlueCross’ door, demanding more from us. They’re being led by negotiators from Chicago-based parent company, CommonSpirit. And that’s part of a pattern with CommonSpirit, who’s led fights for rate hikes across the country. 

And it’s just one of the reasons we’ve become disappointed in CHI Memorial as a partner. 

  • Since becoming part of Chicago-based CommonSpirit, CHI Memorial has repeatedly pushed us to pay them higher and higher rates. It’s part of a pattern by CommonSpirit, who has led high-profile rate fights across the country. 
  • Less than two years after we agreed to a significant rate increase, they came back asking for more – and even pushed for an early end to our contract. 
  • Public data shows that CHI Memorial provides the least amount of charitable care of any local health system. 
  • CHI Memorial sees only a small number of our BlueCare (TennCare) members. They’ve also chosen not to participate in our SelectCommunity, which provides coverage to Tennesseans with intellectual and developmental disabilities. 

The bottom line is that CommonSpirit asked for an increase of roughly $70 million over 3 years, a nearly 40% jump in rates.  We compared CommonSpirit’s proposal to our agreements with other hospitals, and it would make CHI Memorial the most expensive hospital system in the state.

Here’s what their demands would mean to everyday Chattanoogans: 

  • A business owner covering 125 people on their health plan would pay around $100,000 more in premiums over the next three years. 
  • Many members would pay more for common imaging services, with CT scans rising $150 to more than $500 and MRIs going up almost $200 to more than $700. 
  • An outpatient total knee replacement would cost around $4,800 more for a member in Blue Network S – that’s 39% higher than today. Even after a member hits their out-of-pocket maximum, those extra costs get passed on to employers either directly or through higher premiums. 
  • An inpatient coronary bypass would cost around $24,000 more for a member in Network S, taking the price from $61,000 to $85,000. 

These higher prices are simply unacceptable. 

How we’re responding to CHI Memorial’s unreasonable requests 

We declined their push for a rushed timeline. Last fall, CHI Memorial requested an early termination of our contract and a renegotiation with an effective date of January 1, 2024. We declined this rushed timeline, opting to keep the original contract expiration of June 30, 2024, to minimize potential impact on our members were the hospital and its affiliates to leave our networks. 

We’re making sure you know you still have time. BlueCross members will continue to have in-network access at CHI Memorial facilities and with your physicians through June 30 – and beyond, if Memorial agrees to reasonable rates. We’re sharing this information now because we believe you deserve transparency.  

We’re seeking bids for a second health system in Network S. At this point, it’s clear they may not be a good fit to remain in our high-value commercial network, Network S. Here in Chattanooga, Erlanger is the primary system for that network, but CHI Memorial has also been part of the network for many years.  

But that may change soon. We issued a Request for Proposals (RFP) for the second spot in our local Blue Network S, and we’ll make a decision in April. We owe it to local employers and our members to consider all our options.  

We’re continuing to advocate for affordability. CHI Memorial’s requests would make them the most expensive hospital system in the state. We simply can’t agree to that – because you can’t afford it.  

Our Network S RFP gives CHI Memorial every opportunity to remain in that high-value commercial network. They have the same opportunity to pull back on their outrageous requests for higher payments in our other networks, as well. 

We hope CHI Memorial will do what’s best for their patients and our members by agreeing to reasonable rates. And if CHI Memorial ultimately decides to leave any of our networks, we’ll help you find new providers who can give you the care you need at better prices. 

About Scott Pierce, Executive Vice President and Chief Operating Officer

A photo of the authorScott is responsible for day-to-day management and operation of the state’s largest health insurer. He takes an active role in developing the long-range goals, plans and objectives of the organization, and leads operations teams including customer service, claims, clinical staff, provider networks, marketing, and information systems.

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