DOVER — Four months of negotiations haven’t produced results yet.

A contract agreement between Bayhealth Medical Center and insurer Highmark Blue Cross Blue Shield of Delaware doesn’t appear close, either.

According to Bayhealth CEO Terry Murphy earlier this week, there’s still a considerable gap in what’s considered fair reimbursement for patients health care through Highmark insurance.

“Bayhealth and Highmark continue frequent discussions working through the issues but remain far apart on rates,” Mr. Murphy said.

Terry Murphy

At stake is health care coverage for thousands of patients in central and southern Delaware treated in the Bayhealth system, which has nearly 475 employers in its database connected to Highmark.

The current contract expires on May 15, and Bayhealth’s Kent General and Milford Memorial hospitals will then have non-participating status with Highmark. Some form of an agreement has been in place with the entities since 1982.

In recent days, Bayhealth has been mailing more than 19,000 letters to individuals treated in its system the past year reporting the impasse with Highmark.

Highmark notified Bayhealth of its intention to terminate the current contract — active since 2000 — in January.

“Bayhealth and Highmark have been in active negotiations since that time, but unfortunately, Highmark has asked for significant reductions in payment that we simply cannot accept,” Mr. Murphy said.

“These significant cuts will impede us from providing the quality care that our patients and Highmark subscribers expect and deserve from us.”

Countered Highmark, “Bayhealth Medical Center has significantly higher cost than other Delaware adult acute care hospitals,” according to spokesman Matt Stehl.

The current quest for a new contract has been several years in the making, according to Highmark.

“The cost-based payment approach of our current agreement is not cost effective and is not delivering the value that our members deserve,” Mr. Stehl said.

Stating that “Bayhealth wants a fair contract with Highmark,” Mr. Murphy maintains, “We fully understand that Highmark’s decision to terminate our longstanding agreement will cause disruptions for patients, families, state employees and other subscribers.

“Bayhealth is willing to continue negotiations in good faith and resolve this issue in a way that is fair and also prevents that disruption.”

Since 2014, according to Highmark, an attempt to “converting to the now standard value-based agreement” have been going and ,“On behalf of our 19,000 members who have utilized Bayhealth Medical Center in the last 12 months we are working to control rising health care cost by proposing a value-based agreement.”

Citing customers with legitimate concerns regarding the uncertainty and still indicating hope for an agreement, Highmark said it has “begun reaching out to members and employers who may be impacted if we cannot reach an agreement.”

There are approximately 444,000 members in Highmark Delaware, including 110,000 Medicaid members who would not be affected by the negotiation. Highmark also said Medicare Supplemental or Medigap coverage members were not part of the contract concerns.

“We have and will continue to pay hospitals fairly and appropriately,” Mr. Stehl said. “We must balance our provider reimbursements against the continuing concerns of our customers about rising health care costs.”

Assessing the ramifications

Accepting Highmark’s current offer “would be detrimental for years to come for our patients, employees, physicians, nurses, hospitals and the communities we serve,” Bayhealth’s Mr. Murphy wrote to employers on April 13, including Independent Newspapers Inc., of which the Delaware State News is a part.

“As an employer you can certainly appreciate the pressures of providing quality service while keeping pace with new technology, recruitment and retention of staff and increasing operational costs.

“The possibility that we may not be able to reach a satisfactory agreement is deeply disturbing because we believe it is an unnecessary disruption to your employees’ health care and your business.”

The letter concluded, “If an agreement is reached, as we hope, you will continue to receive the same outstanding care from our physicians and at our hospitals.

“We will continue to keep you informed and do everything we can do to help ease this potential transition for your employees.”

The state of Delaware is paying attention, and posted an April 13 Highmark letter on its omb.delaware.gov website in the medical documents section.

According the Office of Budget and Management’w website, Highmark is one of the insurer options for Delaware state employees.

“The state will continue to monitor the situation between Highmark and Bayhealth,” Office of Management and Budget Director of Policy and External Affairs Bert Scoglietti said.

“We will post updates provided to us on our website.”

In the letter, Highmark Delaware President Timothy Constantine said, “Bayhealth’s current high rates are unsustainable and will result in higher premiums and costs for our members.

“We are negotiating on behalf of our members, because higher rates at Bayhealth increase health care cost for you, our member.”

Mr. Constantine said emergency services at Bayhealth’s Milford and Dover hospitals “will be covered for all plans at the higher in-network level, even if we do not reach an agreement before May 16, 2015.

“Going to an out-of-network emergency provider will not reduce your coverage.”

Expressing hope, Mr. Constantine said, “Please be assured that Highmark Delaware and Bayhealth will continue discussions, and we are hopeful that we can reach a new agreement.

“In the meantime, we appreciate your support and understanding as we work toward an agreement that is fair for you as our member, for Bayhealth and for the community.“

The costs discussed

According to Mr. Murphy, Bayhealth was asked by Highmark “to accept a new payment model that shifts more risk to Bayhealth.

“Bayhealth is amenable to that new model of payment, but in addition, Highmark’s plan will significantly reduce reimbursement levels to less than we are currently reimbursed. That is unacceptable.”

Bayhealth contends it is asking Highmark for a revenue neutral contract to hold the line on costs, but “we are seeing the cost of delivering quality health care grow.”

Several factors are contributing to the rising cost of health care operations, according to Bayhealth, including:

• Needed capital improvements.

• Rapid growth in the communities served that force Bayhealth to upgrade and expand capacity.

• New technology costs.

• The energy and cost associated with attracting and retaining highly qualified physicians in central and southern Delaware.

• Higher pharmaceutical costs.

• Labor costs.

• Cancer treatment costs.

• Electronic health record investment and implementation.

Bayhealth listed three leading factors in the ongoing contract negotiations, including:

• Inpatient and outpatient service reimbursement rates.

• Glide paths for the implementation of the new inpatient and outpatient reimbursement methodologies, if agreement on rates is reached.

• Legal contract language.

Communication ongoing

Bayhealth said it will take a financial loss if the contract expires but said its representatives “communicate several times per week (with Highmark) including emails, telephone calls and meetings.

Also, Bayhealth said it has “notified our organization’s leadership, medical staff, employees, local employers and government officials,” Mr. Murphy said. “Letters are being mailed out this week to patients.”

While acknowledging that current employers and employees should be concerned by the developments, Bayhealth said several options for patients are available if their Highmark Insurance no longer applies, including:

• Switch health care insurers (if you are in an active open enrollment period, you can select another plan).

• Continue to receive care at a Bayhealth facility but potentially pay higher out-of-pocket expenses.

•.Choose another hospital to receive non-emergency care (emergency care will still be provided).

• Switch health care providers.

Bayhealth suggested patients wanting to express concerns over the issues could call Highmark at (800) 633-2563 or contact their employer’s benefits manager. Also, employers can ask their human resources department to check on other health plan alternatives.

Coverage will not be cut immediately for some patients if a contract is not agreed upon, Bayhealth said.

“Bayhealth has contracts and participates with all national health care insurance companies,” Mr. Murphy said.

“We will continue to provide care for all emergency services and continue to treat those patients who are in a current series treatment for up to four months.

“Highmark patients can still access Bayhealth but may pay a premium due to out of network status.”