In a cozy out-of-court settlement reached last month, Novant Health System will turn over proprietary utilization data to Blue Cross and Blue Shield of North Carolina.
The state's largest insurer, in turn, has dropped its lawsuit against Novant and will pay the Winston-Salem, N.C.-based hospital system slightly higher charges under Novant's new case-rate pricing structure.
Two months ago, the Blues accused Novant of using its market power to arbitrarily raise prices through the new pricing structure in violation of its service contract.
"We believe what Novant is doing . . . violates a consumer's basic right to know how much they are being charged for a particular product or service," the plan said at the time.
The plan now says the settlement, which allows Novant's pricing system to continue, supports the plan's goal of offering "customers the care they want and need while holding the line on increasing medical costs."
The dispute started last November when Novant told the Blues it was going to increase rates at 747-bed Forsyth Memorial and 59-bed Medical Park hospitals, both in Winston-Salem. It did this by launching a case-rate pricing system, whereby all services related to a particular inpatient stay are grouped into one rate.
"We went to this mechanism because 75% of reimbursements have nothing to do with traditional line-item billing and pricing," said Mike Massoglia, a spokesman for Novant.
A month later, the Blues filed suit against the not-for-profit system in Durham County Superior Court, claiming that the new pricing would violate various agreements and would increase its total inpatient costs by nearly 19%. The state's largest health insurer also demanded that the hospitals provide a charge schedule, hospital budgets, financial statements and projections (Dec. 22-29, 1997, p. 8).
As part of the agreement, Novant said it would give the health plan additional information describing patient care, said Lynne Garrison, a Blues spokeswoman.
In exchange, Novant gets to keep its case-rate pricing, and "a slight increase" in the rates will take effect immediately, Garrison said.