Grady, Blue Cross in Standoff Over Reimbursements

Atlanta's safety net hospital claims Blue Cross pays it 70% less than other comparable organizations. The payer insists it's being fair with reimbursement rates. Despite an aggressive public campaign by Grady, the outcome is uncertain.

By now most of us have recovered from whatever squabbles erupted around the holiday dinner table, but Atlanta's Grady Memorial Hospital's very public feud with BlueCross BlueShield of Georgia—which began just after Thanksgiving—shows no signs of letting up.

The 950-bed safety-net hospital fell out-of-network with Blue Cross in late November after the two organizations failed to come to a contract agreement. Grady's sticking point is its claim that Blue Cross pays the hospital 70% less than other comparable organizations. According to documents Grady released in December, Blue Cross pays $1,294 per outpatient surgery, compared to the hospital group average of $5,447, for example.

Blue Cross insists it's being fair with reimbursement rates.

"We've submitted five contract proposals to Grady,'' a spokesperson told Georgia Health News on December 12. "Each one contains a significant reimbursement increase across the board, including for outpatient services, which [Grady says] is an area of particular concern. They've rejected each of those proposals. They told us three weeks ago they saw no reason to continue contract talks."

Bargaining Table to Public Arena
Since then Grady has taken its bargaining tactics a step further, launching a full-out assault campaign blaming the breakdown on Blue Cross and urging members of the community to let the insurer know they stand with the hospital.

Beginning in mid-December, Grady placed full-page print ads in local editions of national newspapers, launched a TV spot, and orchestrated a social media movement using Twitter hashtags #BeFAIR2Grady and #ShameOnBlueCross.

The 90-second TV spot tells the story of Charles, a patient with Blue Cross insurance who received life-saving surgery at Grady to treat a brain aneurism.

"They told me that Grady was the only place that could do what was needed to be done," he says in the testimonial, filmed in black and white. "Two hours later I'm having brain surgery. I had to tell my wife goodbye just in case."

After Charles' sometimes tearful testimonial, the video goes silent and the following black text appears on a white screen.

"Georgia depends on Grady and we all have a responsibility to keep it working. Blue Cross Blue Shield abandoned its responsibility to pay Grady fairly. Charles won't have access to Grady next time. Shame on you Blue Cross Blue Shield."  

Controversial Tactics
Blue Cross hasn't responded with any ads of its own, but it has publicly condemned the hospital for the effort.

"We don't believe it's productive or informative," a Blue Cross spokesperson said in an email to Georgia Public Broadcasting. "Our hope is that Grady will choose to come back to the negotiating table so that we can reach an agreement on fair and sustainable contract terms... Our focus is on the negotiations and productive two-way communication, not buying ads to disparage the other side."

Grady hasn't released what it's spent to run the campaign, but Lindsay Caulfield, the hospital's vice president of public affairs and marketing, says the direct message is getting the attention Atlanta's public hospital was after.

"Advertisements are an important vehicle to tell the public the entire story,'' she told Georgia Health News. "It's simply a truth-telling exercise."

As an apparent result of the campaign, public support for Grady has been flooding in—protesters demonstrated on behalf of the hospital on December 9, a local senator reportedly among them. (Incidentally, the same senator blasted Grady for its high marketing budget back in 2010.)

"I think that this is only one other way that we can kind of come together and have those voices that help us say, you know, we want to reach a fair resolution," Caulfield told Georgia Public Broadcasting.

Stalemate
The value of Grady's ad campaign remains to be seen, as no known progress has been made since negotiations broke down. It doesn't help that any momentum built seems to be dwindling—Grady itself hasn't directly tweeted about the issue since December 17.

At the end of the day, neither organization looks great here. While public sympathies will always lie with a nonprofit hospital over a health insurer, Grady's aggressive campaign style will likely put some people off.

Ultimately, this boils down to two issues. First, both organizations could do with a reminder that it's the newly out-of-network patients who are suffering here. And secondly, as pay disputes between hospitals and insurers intensify nationwide, it will be interesting to see if any other organizations take a cue from Grady and make matters public in an attempt to gain the upper hand.

Of course, that all hinges on the outcome. And depending on how long this drags out, one or both organizations may need to launch an image campaign to save face.