Blue Cross and Blue Shield of Oklahoma said Wednesday it reached an agreement with the state's largest physician group, just weeks before the transition period out of its contract with OU Health Physicians was set to end.
The new agreement will impact BCBS Oklahoma's more than 830,000 members. The two groups will extend their contracts through June 2022 and, over the next year, BCBS Oklahoma and OU Health will also work to define a new, long-term agreement.
"We value our long-standing relationship with OU Physicians and are pleased to reach an agreement that is in the best interest of all BCBSOK members, including group, retail and tribal citizens," BCBSOK President Joseph R. Cunningham said in a statement. "This agreement aligns with our commitment to provide access to quality, cost-effective healthcare for all Oklahomans."
The two groups announced in March that they had not been able to reach an agreement, after negotiations stretched for at least a year. Their last contract ended in 2019, but the COVID-19 pandemic had stalled negotiations.
OU Health Physicians accused the insurer, which is an affiliate of Health Care Service Corporation, of using its "unequaled market share" to strong arm its physicians into accepting low rates, which contributed to the state's physician shortage. The health system added that BCBS Oklahoma generated "windfall profits" during the pandemic, thanks to members' deferred care. For many years, BCBS Oklahoma was the only insurer operating on the local ACA exchange. In 2018, it held all of the market share on the marketplace, according to the Robert Wood Johnson Foundation.
The not-for-profit insurer, for its part, called OU Health's reimbursement request "excessive," adding that the group is calling for higher rates while offering no new access to care for its members.
It accused the hospital system of bringing in a negotiator from the West Coast, who compared the rates Oklahoma physicians receive with out-of-state-providers. BCBS said it negotiates rates with physician groups based on the local cost-of-living index, and that Oklahoma has one of the lowest cost-of-living rates in the nation. If the insurer were to bend to OU Health's proposed rates, the employee-owned insurer said the increased fees would be passed on to members via higher premiums and "significantly raise healthcare costs for patients."
OU Health makes up 1,000 providers of the 21,000 providers in BCBS' main PPO network. The insurer said it had held a contract with OU Health for at least 20 years. OU Health said it provided services to approximately 131,600 BCBS insured patients in 2020.
"OU Health Physicians is pleased to have reached a 13-month agreement with BCBSOK," Dr. John Zubialde, president of OU Health Physicians and executive dean of the University of Oklahoma's College of Medicine, said in a statement. "Providing access to highly specialized healthcare services for our BCBSOK-insured patients is a unified goal between our two organizations. Today's announcement is especially significant for our critically-ill patients who will continue to benefit from access to the state's largest and most specialized group of physicians."
This isn't the only contract dispute BCBS Oklahoma has run into recently. The insurer and Saint Francis Health System failed to reach an agreement in early May. The Tulsa-based hospital network accused the insurer of changing the contract agreements at the last-minute, and attempting to hoodwink Saint Francis into paying lower rates.