Premera Blue Cross, one of Washington’s largest health insurers, is firing back against Seattle Children’s hospital’s effort to get Premera’s health plans removed from the state’s online insurance marketplace.
Children’s filed an administrative appeal last week with the state Office of the Insurance Commissioner (OIC) asking that Premera and four other insurers be ousted from the exchange for failing to include the pediatric hospital in their provider networks.
Children’s argues in its appeal that it must be included in the networks because it is the only hospital in the Northwest that offers certain specialized pediatric services, including acute cancer care; inpatient pediatric rehabilitation; Level 4 neonatal intensive care; and heart, liver and intestinal transplantation.
But Premera said Monday that, contrary to Children’s claims, Premera’s plans for the individual and small-group market in 2014 do cover services at Children’s not available from other providers.
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Premera will provide the same coverage for “unique services” performed at Children’s that it provides for the services of its in-network providers, said Premera spokesman Eric Earling.
Premera is able to cover those services at Children’s because of its existing contracts with the hospital for its clients in the large-employer market, Earling said. But it will not provide in-network coverage for Children’s services that can be obtained at providers in Premera’s own network, he said.
Premera’s decision not to include all Children’s services in its network for 2014 individual and small-group plans, both on and off the exchange, is an issue of affordability, Earling said, because Children’s charges higher rates than other providers for many services. “If you look at the numbers, it’s pretty straightforward,” he said.
Premera estimates that about 88 percent of the services its members use at Children’s are ones that can be obtained from other providers, sometimes at a much lower cost.
The company’s analysis found that visits at Children’s for services not unique to the hospital cost approximately 60 percent more than the average cost of such services at other hospitals in Premera’s statewide network, Earling said. Premera took into account the severity and complexity of the cases Children’s sees in making its calculations, he said.
Premera provided specific examples of the cost difference for certain common, inpatient services that can be obtained at Children’s, as well as other providers, based on routine cases in the Seattle market.
For a pediatric appendectomy, for example, Children’s charges $23,300, on average, while other Seattle hospitals charge $14,100, on average, Earling said.
In another example, Children’s charges an average $15,300 for an inpatient stay for pediatric fever compared with $6,300 at other hospitals in Seattle, he said.
In a statement issued in response to Premera’s claims, Children’s spokeswoman Kathy Porada said the hospital does not have a contract with Premera for patients covered by its exchange plans and is not an in-network provider for its exchange plans.
“While we do have a contract with Premera off the exchange, those terms do not apply to exchange plans,” she said. “Therefore, it’s inaccurate to state that all Premera plan holders have in-network access to Children’s.”
Porada also noted that Children’s takes care “of the very sickest and most complex children in the entire Pacific Northwest. To do that, we need to have a level of investment and infrastructure that is simply not asked by most other institutions. If the care is expensive, it’s because of those reasons.”
Porada said Children’s has laid out its argument in its appeal that has been sent to an administrative-law judge at the OIC.
Besides Premera, the other insurers Children’s named in its appeal are LifeWise Health Plan of Washington (a Premera subsidiary), Bridgespan (an affiliate of Regence Blue Shield), Coordinated Care Corporation and Molina Healthcare of Washington.
Children’s announced later that it had reached a tentative agreement with Molina to include Children’s in Molina’s provider network for the health plans it is selling through the exchange.
But Premera is sticking with its decision. The company’s goal was to build a “value-based network” to keep its products affordable in the individual and small-group markets, while also maintaining access to high-quality care, Earling said. “And we were able to achieve that.”
Amy Snow Landa is a freelance writer in Seattle. This report was produced through a partnership with Kaiser Health News, an editorially independent part of the Kaiser Family Foundation.