Grady, Blue Cross reach deal after long deadlock

Atlanta’s biggest health contract dispute in years is over.

Morgan Kendrick
Morgan Kendrick

Grady Health System and Blue Cross and Blue Shield of Georgia announced Monday that they have agreed to a new contract effective April 1.

Their contract lapsed in late November, when they failed to negotiate a new one before the deadline. The collapse of the negotiations was a surprise, because payment disputes between insurers and hospital systems are almost always resolved before an existing agreement expires.

And the persistence of the stalemate was equally unusual. For four months, Grady Memorial Hospital was “out of network’’ for Blue Cross health plan members, who faced higher out-of-pocket costs at the Atlanta facility. 

The dispute was widely watched in health care circles and also helped prompt legislation in the General Assembly.

“We are pleased to announce that we have reached a fair and sustainable agreement,” said Morgan Kendrick, president of Blue Cross, in a statement. “Historically [Blue Cross] and Grady have worked together to provide access to quality medical care.  We look forward to continuing this relationship for many years to come.”

John Haupert, president and CEO of Grady, said, “We are happy we have successfully and mutually reached a new agreement with the largest health insurer in Georgia. This new agreement means that Blue Cross members once again have access to the unparalleled skill and experience that Grady provides area residents.”

After the contract expired, Grady launched a media campaign that framed the disagreement in strong terms. The hospital asserted that it had been underpaid by Blue Cross for years. The insurer countered that it had paid Grady no differently from any other large urban hospital in Georgia.

Grady Memorial Hospital
Grady Memorial Hospital

Legislation pending in the General Assembly would require the state employee and teacher health plan to include the state’s five Level 1 trauma centers as “in-network” facilities. That would force Grady, a trauma center, to become in network for the State Health Benefit Plan, where Blue Cross is the dominant insurer.

Haupert, the Grady CEO, had told lawmakers that because of the out-of-network status, SHBP members had left the facility still owing thousands of dollars.

And in February, the chairwoman of a key House health panel went on record as saying that Blue Cross, Georgia’s largest health insurer, was acting as a “bully’’ in its dealings with medical providers.

State Rep. Sharon Cooper (R-Marietta) also said Blue Cross “disrespected” the House Health and Human Services Committee by failing to send a representative to a panel meeting at which complaints against the insurer were discussed.

Chris Kane, a consultant with Dixon Hughes Goodman Healthcare, said Monday that the duration of the contract dispute was surprising, but that an agreement was inevitable.

“Both organizations have a high profile in Georgia health care,’’ Kane said. “For Grady, it was a substantive financial issue; for Blue Cross, a noticeable public relations issue.”

“It’s beneficial that both parties resolve this during the legislative session,’’ Kane added. “I would guess legislators were weighing in on both sides.”