Grady using tough ads in Blue Cross dispute

The starkly worded ads call it an issue of fairness.

With full-page advertisements in newspapers and through TV commercials, Grady Health System has ramped up its media campaign to bring attention to what it says are unfair payments from Georgia’s largest insurer.


“Blue Cross Blue Shield pushed Grady out of its network,’’ say the ads in the Wall Street Journal and the AJC, which appeared in editions this week.

Grady Memorial Hospital and its clinics, as of Nov. 24, are “out of network’’ for Blue Cross and Blue Shield of Georgia’s health plan members after contract negotiations between the two organizations broke off late last month.

Though the two sides had appeared far apart on what the safety-net hospital system would be paid for services, the collapse of the contract negotiations came as a surprise. Almost invariably, pay disputes between insurers and hospital systems are resolved before an existing agreement expires, though often in the final hours before the deadline.

Since these talks failed to produce a deal, however, patients with Blue Cross insurance face higher out-of-pocket costs at the Atlanta hospital and its clinics.

Morgan Kendrick
Morgan Kendrick

Blue Cross says it has paid Grady no differently than any large urban hospital in Georgia. “Grady gets paid very well,’’ Morgan Kendrick, the Blue Cross president, told GHN on Tuesday.

He pointed out that Blue Cross has contracts with all Georgia hospitals except Atlanta-based Grady and Polk Medical Center in Cedartown.

Meanwhile, Grady says it has received “an overwhelming response from patients and community leaders” from its advertising.

“Advertisements are an important vehicle to tell the public the entire story,’’ Lindsay Caulfield, senior vice president of public affairs and marketing at Grady, told GHN. “It’s simply a truth-telling exercise.”

She repeated the ad’s assertion that Blue Cross pays Grady up to 70 percent less than what it pays other Georgia hospitals.

“Blue Cross has all the facts – their claim that they’re paying Grady fairly is not factual.”

Grady has also placed an ad in USA Today’s regional paper that appears in Indiana, home of Blue Cross’ parent company, WellPoint.

“It appears all important decisions are being made in Indianapolis, not here,’’ Caulfield said.

Kendrick said Blue Cross has fielded some calls and emails from the Atlanta area about the Grady situation.

“Grady is revered in this city,’’ he said. “Our organization has a long history of supporting Grady.”

Grady Memorial Hospital
Grady Memorial Hospital

“It’s our desire to pay our providers fairly and competitively,” said Kendrick. He said Blue Cross offered new contract terms to Grady that represented a substantial rate increase.

Typically insurers and hospitals feel too much pressure from policyholders and from the revenue side to let a contract lapse for long, said Craig Savage, a consultant with CMBC Advisors in Durham, N.C. “Grady has kind of drawn their own line in the sand.’’

Health insurers are pressing to keep their rates for hospitals flat, Savage said. “They see the federal government doing the same thing.”

The Grady-Blue Cross standoff will eventually be worked out, Savage said. But as long as any such conflict between a hospital and an insurer goes on, he said, the patient always gets caught in the middle.

Blue Cross is the biggest commercial insurer for Grady. Still, private insurance accounts for just 11 percent of the system’s revenue.

Grady said recently that it’s now focusing on private insurer reimbursement, with Blue Cross the first contract under review.

Grady said Tuesday that it planned to continue the ad campaign. “It’s generating lots of support for Grady,” Caulfield said.

Kendrick said Blue Cross wasn’t considering mounting its own ad barrage. “I don’t think it’s productive.”

From both sides, though, there were expressions of hope.

Kendrick said: “I’m hopeful that Grady will want to have a conversation with us.”

Caulfield said, “We really want to work this out.”