Empire, Alliance reach agreement

04/08/2010 12:00 AM |

Paul Connor III, Eastern Long Island Hospital president and CEO, announces the settlement of a 33-month contract with Empire Blue Cross Blue Shield during a press conference at Peconic Bay Medical Center Monday. Looking on, from left: PBMC president and CEO Andrew Mitchell, Southampton Hospital president and CEO Robert Chaloner and East End Health Alliance board president Carole Donlin.

After a year of negotiations and eight months without a contract, the three East End Health Alliance hospitals have struck a deal with Empire Blue Cross Blue Shield covering elective surgeries and lab procedures.

Details of the 33-month contract won’t be made public, as insurers prevent hospitals from revealing settlement terms, but Eastern Long Island Hospital president and CEO and alliance spokesman Paul Connor said the alliance had obtained “parity” with reimbursements Empire pays for similar procedures performed by Nassau County hospitals.

“It’s really about the people on the East End,” who deserve the same quality of treatment that patients throughout Long Island receive, said Peconic Bay Medical Center president and CEO Andrew Mitchell.

“Financially, it was worth the wait,” Southampton Hospital president and CEO Robert Chaloner added.

Facing cutbacks in state aid, the failure of the alliance to successfully negotiate could have placed the survival of the three hospitals in doubt, Mr. Mitchell said during a Monday morning press conference in Riverhead.

At the same time, because Empire covered the cost of admissions through emergency rooms, the three hospitals may not have lost money during the time they were out of network, Mr. Connor said. The previous contract with Empire expired last July 31.

“We were able to make it from a cash flow perspective,” said Mr. Connor. But hospitals don’t like to have to plan on emergency room admissions for their survival, he said. Just how much the hospitals made or lost during the eight months won’t be known until the hospitals’ audits are completed later in the year, he said.

In a written statement, Empire president and CEO Mark Wagar called the pact “a fair agreement that meets the needs of our community and our members. It achieves our number one goal of keeping quality health care affordable for our members.”

Although word of the settlement came late last week, the Monday morning press conference at Peconic Bay Medical Center gave hospital chiefs and elected officials an opportunity to compliment one another on a job well done and to answer what questions they could about the new contract.

Mr. Connor said the compromise reached is something that the three alliance hospitals never could have negotiated individually.

“This was one of the first major tests” of the alliance, said Sen. Kenneth LaValle (R-Port Jefferson). He was instrumental in helping to form the alliance and in interceding with Empire officials to keep the talks going.

“Everybody worked together” to financially do the best they could for the hospitals, the community and patients, Mr. LaValle said.

“This is not an easy time for health-care delivery services,” said Rep. Tim Bishop (D-Southampton). The business models of nonprofit hospitals and for-profit insurance companies may not be compatible in the long run, he said. But Monday was “indeed a happy day” and “a lucky day for the patients of three first-rate hospitals,” the congressman said.

Assemblyman Marc Alessi called it a “remarkable day,” but not unique to the East End. He’s focused on looking at the issue of how such agreements get hammered out throughout the state, he said.

Suffolk County Executive Steve Levy joked that he was so intent on keeping the negotiations bipartisan that he started off dealing with the issue as a Democrat and ended up as a Republican. He announced last month that he was switching parties and running for governor as a GOP candidate.

“It was a long, hard fight, said Assemblyman Fred Thiele Jr. (R-Bridgehampton).

“I’m not happy with how long it’s taken,” Mr. Connor said during a telephone interview last week. At the end of last August, a month after the hospitals went out of the Empire network, the two sides did come to terms on enabling seniors on Medicare with an Empire MediBlue wraparound policy to be treated at any of the three hospitals.

At the outset of talks, the hospitals were asking for increases of about 60 percent. Mr. Connor argued at the time that other health insurers had been paying much higher fees for services the hospitals provide and that the request was meant to bring Empire into line to cover the actually cost of those services.

Empire continually argued that to meet the request would result in higher premiums and co-pays at levels that would be cost-prohibitive.

Throughout the past eight months, there have been periods of cooperation that hinted at a possible settlement, only to lead to several breakdowns in talks. Last May, the alliance submitted its written proposal to Empire and “it went downhill from there,” said Mr. Connor.

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