A messy contract dispute between Bon Secours Mercy Health and Anthem Blue Cross Blue Shield has left 11,000 Virginians who have Medicare plans through Anthem out of network for Bon Secours, which operates numerous hospitals in the Hampton Roads and Richmond regions. 

If the disagreement isn’t resolved by Oct. 1, an additional 39,000 Virginians who get Medicaid coverage through Anthem could also find themselves out of network, potentially facing disruption to their ability to get health care. Thousands of low-income people with managed Medicaid plans through Anthem in Ohio already are unable to get their care covered at Bon Secours Mercy Health facilities in that state. 

“An entire health system going out of network doesn’t just impact the hospital,” said Sara Cariano, deputy director of the Center for Healthy Communities with the Virginia Poverty Law Center. “We want folks to be able to access care when they need it, particularly the most vulnerable.” 

Anthem has accused Bon Secours Mercy Health of using Medicare and Medicaid patients as leverage in an effort to force the insurer to increase its reimbursement rates for services provided to Anthem customers with employer-sponsored or Affordable Care Act plans. 

The insurance giant said the two had entered into a new three-year contract in January 2022 that included annual payment increases for Bon Secours. But it claims that in late 2022, the hospital system asked for double-digit rate increases. Following the failure of negotiations, Bon Secours then exercised a termination provision allowing it to end in-network coverage for patients with managed Medicare plans through Anthem. 

“Anthem and Bon Secours signed a mutually agreed upon provider contract with annual increases to address inflation and labor costs just 18 months ago,” Anthem’s parent company, Elevance Health, said in a statement. “That contract is what Bon Secours is now asking to renegotiate using Virginia’s vulnerable populations as leverage.” 

Bon Secours has argued that the rates paid by Anthem under its current contract are “substantially less” than those paid by other insurers and “have not kept up with inflation or labor costs” while accusing the insurance company of “doubl[ing] down on poor payment and contract practices.”  

“Anthem has continued to demonstrate a lack of awareness regarding the real-world challenges faced by providers and our communities in the current economic environment,” said Emma Swann, a spokesperson for Bon Secours, in an email. “Our increases from Anthem today are far less than a quarter of current inflation, and Bon Secours has limited our recent increase request to fall materially below current inflation in recognition of our responsibility to be financial stewards for our community.” 

The hospital system also says the insurer owes it “more than $100 million in late and unpaid claims.” 

“We are quite simply unable to sustainably further our mission of caring when Anthem leaves us to absorb the cost of care they refuse to pay,” said Swann.  

Anthem says the $100 million figure is “inflated.” 

If no resolution between the two parties can be reached by the end of September, the dispute is poised to extend to low-income Virginians who have Medicaid plans through Anthem. 

If those members become out of network at Bon Secours, they will have to look for care from a provider that remains in network or ask the state to change their plan to one that continues to contract with Bon Secours. While state law limits Medicaid plan enrollment to the 90-day open enrollment window, it provides certain exceptions for people to switch plans midway through their coverage, including a “lack of access to network providers experienced in dealing with the member’s health care needs.” 

James Gelfand, CEO and president of the ERISA Industry Committee, a group that represents roughly 100 of the nation’s largest companies in regard to the health and retirement benefits they are required to provide under federal law, called the dispute “bizarre.” Both the disagreement’s timing in the middle of an ongoing contract and the impact on Medicare and Medicaid enrollees are unusual, he said. 

“It’s a new kind of negotiating tactic. It’s one I haven’t seen used before,” he said, warning that “if the insurance company was to cave to the demands of the hospital system, it would mean everyone on private insurance would pay more.” 

Numerous hospitals in Virginia in recent years have argued insurance companies aren’t paying them sufficient reimbursement rates given increasing labor, drug and supply costs. The American Hospital Association earlier this year said hospital expenses rose 17.5% between 2019 and 2022.

In Hampton Roads, Cigna and Chesapeake Regional Medical Center have been locked in negotiations over rates this spring and summer. Anthem also previously had rate disputes with the Fishersville-based Augusta Health, which led to a short-term disruption in coverage, as well as Valley Health in the Shenandoah Valley.