Residents may be caught in the crossfire between one of the largest healthcare providers in the area and the leading health insurer in Massachusetts after a dispute over reimbursement rates has stalled negotiations.

Southcoast Health is threatening to terminate its contract with Blue Cross Blue Shield MA if the companies fail to reach an agreement over rates for the next four years ⁠— meaning that its hospitals would no longer be in the insurer’s network starting January 1, 2020.

According to Blue Cross Blue Shield, around 14,000 members with their insurance see primary care doctors within the Southcoast system, which includes St. Luke’s Hospital in New Bedford, Charlton Memorial Hospital in Fall River, and Tobey Hospital in Wareham. Southcoast puts that number at about 22,000.

Among Blue Cross members that may be affected are employees of the Town of Dartmouth, including teachers and police.

Dr. Ronnie Brownsworth, President of the Southcoast Health Network, stated in a letter to business leaders in the region that “As one of the top Massachusetts hospitals...An equitable and fair rate would align us with our community hospital peers across the Commonwealth.”

But Senior Vice President at BCBSMA Jay McQuaide noted that at a time of spiraling healthcare costs, the system is under pressure to rein it in.

“We greatly value the care that the clinicians and hospitals at Southcoast Health provide to our members,” he said. “But at a time when the cost of heathcare is a major issue facing employers and families, on behalf of our customers we simply cannot agree to a price increase of almost 30 percent over four years.”

McQuaide cited Massachusetts’ Health Care Cost Growth Benchmark, which sets a target of growth for total health care costs in the state at 3.1 percent for 2020, as part of the reason the company could not meet Southcoast’s demands.

“We’re all working really hard to meet that target,” he noted, adding that in order to reach it, Southcoast’s rate could only go up 1.5 percent next year.

However, Brownsworth disputes the idea that the rate increases would affect this target. “It is highly unlikely that our ask would have a strong effect on the benchmark,” he noted in a written statement.

McQuaide said that Blue Cross is offering Southcoast a 3 percent increase per year, or 12 percent over the four year contract period ⁠— which he said was “on the upper end” of what the insurer offers other providers.

“If we were to agree to the kind of price increases Southcoast is demanding...It would increase the burden on families and employers that use Southcoast hospitals and facilities,” he said.

McQuaide also noted that Southcoast already earns “a healthy profit margin”, and that this is the third time in a decade the healthcare provider has told them it would withdraw from the network.

“We understand it’s part of the negotiating process,” he said. 

Brownsworth pointed out, however, that according to data from the Center for Health Information and Analysis, Southcoast Hospitals Group is paid 13 percent less than the average statewide relative prices across hospitals in Massachusetts, and lags even further behind other highly regarded hospitals.

“Cape Cod Hospital receives 64 percent higher reimbursement than we do,” he noted. “Beyond our region, North Shore Medical receives 18 percent more, Baystate Medical receives 21 percent more and South Shore Hospital receives 17 percent more.”

“This is an issue of regional equity,” Brownsworth continued. “Even if BCBSMA agreed to a fair rate, it would still not bring our reimbursement rate to the level of other health systems that offer service on par with ours.”

He added that costs have gone up an average of 4.5 percent, compared to rate increases from Blue Cross of .75 percent each year.

“This is unsustainable for a health system that is committed to providing world-class healthcare for its patients in a community setting,” he stated.  

Nonetheless, both sides will continue the negotiations.

McQuaide stated, “We remain hopeful and are committed to resolving the differences here.”

More information can be found on the Blue Cross Blue Shield Massachusetts website and on the Southcoast Health website.

This article has been updated to include information from a written statement by Dr. Brownsworth of Southcoast Health Network.