Grady says figures prove Blue Cross is unfair

Grady Health System has released financial data that it says buttresses its argument that it has been paid unfairly by Blue Cross and Blue Shield of Georgia.

It’s the latest salvo in the contract battle between the major Atlanta safety-net provider and the state’s biggest health insurer.

Grady Memorial Hospital
Grady Memorial Hospital

Since late November, Grady Memorial Hospital has been “out of network’’ for Blue Cross’s health plan members after contract renewal negotiations between the two organizations broke down.

Because those talks failed to produce a deal, patients with Blue Cross insurance face higher out-of-pocket costs at the Atlanta hospital.

Grady has mounted a vigorous media campaign asserting that it has been underpaid by Blue Cross for years. Blue Cross has issued arguments against Grady’s stance in a less publicized way.

The newly presented financial figures, Grady says, were based on a 2012 study facilitated by a national hospital association and compiled by an independent consulting group.

“Because we are still negotiating with Blue Cross, we didn’t want to share details – but the insurer is misinforming the public so it is important we share the facts,’’ Grady says in announcing the study results.

The data show differences between what Grady is paid by Blue Cross for services versus a hospital “group average’’ from the insurer.

The health insurer’s payment per patient to Grady for outpatient surgery is $1,294, versus a hospital group average of $5,447, a 76 percent differential, says the health system. The emergency payment per patient for Grady is $825, versus $1,031 for the hospital group; and $241 for outpatient services, versus $967.

In addition, Grady says it’s paid less by Blue Cross than what Medicare and Medicaid pay for outpatient and emergency services.

Grady acknowledges that it made a slight profit from Blue Cross due to the reimbursement rates for inpatient services.

But it also contends that the 2012 study indicates that Grady gets up to an 86 percent lower “yield” on outpatient business than the other hospitals.


A Blue Cross spokesman told GHN in a statement Friday that “Grady’s study acknowledges what we’ve been saying all along: that on their total contract with Blue Cross and Blue Shield, they make a profit.”

“We’ve submitted five contract proposals to Grady,’’ said the spokesman, Tony Felts. “Each one contains a significant reimbursement increase across the board, including for outpatient services, which they say is an area of particular concern. They’ve rejected each of those proposals. They told us three weeks ago they saw no reason to continue contract talks.

“We hope they’ll reconsider and come back to the negotiating table.”

Earlier this month, Blue Cross told GHN that it has paid Grady no differently from any other large urban hospital in Georgia. “Grady gets paid very well,’’ Morgan Kendrick, the Blue Cross president, told GHN.

Lindsay Caulfield, a Grady senior vice president, told GHN on Friday that the organization has made “a very slight profit’’ on its Blue Cross business, but that it’s eroded by underpayments on emergency and outpatient care.

She said that both sides currently are exchanging contract ideas and that she is hopeful that an agreement can be worked out.

The November collapse of the contract negotiations came as a surprise. Payment disputes between insurers and hospital systems are almost always resolved before an existing agreement expires, though often in the final hours before the deadline.

Grady, in releasing the financial data, says that as a Level 1 trauma center, it’s “best-equipped and best-trained to handle the most serious, complicated and life-threatening cases.”

But to sustain theses services, Grady says, it must absorb millions of dollars in costs every year.

“Private insurance companies need to do their part to support this infrastructure and not put the community in harm’s way,’’ Grady says. “Therefore, we must be paid fairly by Blue Cross for the unique services we provide its members.”