Citing increased reimbursement rates, Anthem Blue Cross and Blue Shield officials said Tuesday they are terminating their contract with Carson-Tahoe Hospital effective March 12.
About 1,400 Carson-area residents will be forced to go either to Barton Memorial Hospital or Washoe Medical Center for their elective health care. Both hospitals are more than 30 miles from Carson City.
The cancellation does not affect more acute care and is not expected to seriously affect Carson-Tahoe's market share or its ability to build a new regional medical center, said Carson-Tahoe Hospital's Chief Executive Officer Ed Epperson.
Anthem Blue Cross officials said negotiations with the hospital for "market competitive reimbursement rates were unsuccessful."
"Carson-Tahoe is no longer competitive with other facilities," said Sally Vogler, spokeswoman for Anthem Blue Cross in Denver. "We hate to send our customers out of the market area, but we have a mandate to keep rates affordable. We've negotiated contracts with Barton Memorial Hospital and Washoe Medical Center."
She said Blue Cross has contracted with Carson-Tahoe Hospital since 1994. Reimbursements at that time were in line with other hospitals, but the market changed dramatically.
Vogler was unwilling to define those increased rates. But Epperson flatly denied the allegation, citing comparative hospital costs in a recent study released by Nevada's Division of Health Care Financing and Policy.
Billed charges per adjusted admission averaged $23,849 across Nevada, the study said. Carson-Tahoe averaged $14,975, and Washoe Medical Center averaged $23,511. The figures come from a summary financial report ending June 30.
Michael Blair, chief financial officer for Carson-Tahoe, said the hospital's rates increased 8 percent Oct. 1, but he believes other hospitals did the same.
Vogler said Blue Cross spent two to three months negotiating with Carson-Tahoe. Letters to members and providers have been sent, but they aren't closing the door to further negotiations.
"We're hoping we can work something out," she said. "This has been very difficult for everyone."
Epperson said hospital officials received notice of the cancellation Dec. 17.
"We tried to follow up and negotiate after they demanded a huge discount," he said. "Last week we counter-offered, with a discount that would have cost us about $1 million per year."
Epperson said Carson-Tahoe had not received a response to its offer until Tuesday.
Coincidentally, Washoe Medical Center held a meeting concerning Blue Cross with its administrators and physicians Tuesday. Epperson said he was told to expect the cancellation.
"I'm sure this is part of how Blue Cross does things," Epperson said. "They're an aggressive company."
"This is business for Carson-Tahoe and Blue Cross," Blair said. "Either we'll work it out, or go our separate ways. If we can't work it out, we're hoping employers will be willing to move to a different health plan."