What's going on between Catholic Health and Highmark?

Dec. 20—When will they reach a deal?

You've probably seen the Catholic Health billboards, newspaper advertisements or videos.

"Highmark, we're challenging the call," the advertisements read, showing a red challenge flag on a football field. "Western New Yorkers recognize our caregivers' worth. You should too."

So, what's this all about? Why is Western New York's second-largest health system battling — in very public fashion — with the region's largest health plan?

What's going on?

Catholic Health and Highmark Blue Cross Blue Shield of Western New York are in the midst of negotiating a new agreement, contracts that typically last several years.

These talks usually stay behind the scenes and determine the reimbursement rates that insurers, such as Highmark, will pay in-network health providers, such as Catholic Health.

Just recently, we've seen a couple local deals reached.

Highmark on Nov. 15 announced it had reached a new long-term agreement with Kaleida Health.

And on Dec. 16, Catholic Health and Catholic Medical Partners announced a two-year agreement with Independent Health that ensures the Amherst health plan's members continue to have access to Catholic Health facilities through 2024.

But so far, Catholic Health and Highmark — in negotiations since February — have been unable to reach a new long-term contract.

What should patients know?

It is true the current contract between Catholic Health and Highmark expires Dec. 31.

But in New York, there is a requirement that health plans and hospitals continue negotiating for 60 days beyond contract expiration, Highmark spokesperson Kyle Rogers said.

That means the two sides have until at least Feb. 28 to reach a new agreement that would ensure Highmark members continue to have in-network access to Catholic Health's hospitals, nursing homes and ambulatory surgery centers.

So, Highmark members can continue to receive care at in-network rates at Catholic Health facilities for at least the next couple months before their coverage would be interrupted.

But if a contract isn't reached by March 1, only certain services will be covered as in network for Highmark members at Catholic Health facilities, including cases of emergency and if no in-network provider can deliver the services required, according to Highmark's website.

Highmark also points out that these talks do not affect the network status of Catholic Medical Partners, as the insurer has separate agreements with the group's primary care and specialty physicians.

Catholic Health President and CEO Mark Sullivan noted, however, that Catholic Health and Catholic Medical Partners are closely aligned and "negotiate as one." So, while Catholic Medical Partners has a separate contract with Highmark, Sullivan said that Catholic Medical Partners is on the call every week when Catholic Health negotiates with Highmark.

Why has a deal been elusive?

The two sides have not come to terms yet on mutually agreeable reimbursement rates.

On its website, Highmark says its proposed terms would increase compensation and reimbursement to health care professionals at Catholic Health, but ...

"Catholic Health's requests far exceed what other hospitals in the region requested," Highmark says on its website, noting that it is also trying to keep health care costs reasonable.

But Catholic Health doesn't think it is asking for anything unreasonable.

Sullivan said Catholic Health is "not looking for a bailout." But the health system's costs have increased — including higher wages to attract and retain nurses, rising drug costs and other supply chain pressures — and it wants to land sustainable reimbursements in these contract talks.

It is likely not the only difficult negotiations ongoing between health systems and health plans, especially in deals where insurance payments haven't kept up with inflation.

And many health systems, including Catholic Health, are facing major losses. Through the first nine months of 2022, Catholic Health recorded an operating loss of $138 million, according to a required disclosure to investors after a bond issuance this year.

And Catholic Health isn't alone. A report released Dec. 14 from several New York hospital associations indicated that 64% of hospitals in the state reported a negative operating margin. Meanwhile, 85% of hospitals reported margins of less than 3%.

Will they get a deal?

There is no deal, yet, but both sides expressed confidence recently that an agreement could get done.

"We feel that we're making progress and are optimistic that we'll reach an agreement," Rogers said Dec. 16.

Sullivan said they're not there yet, but he feels as though Catholic Health's message is getting through to Highmark.

He also said he believes Catholic Health and Highmark are exchanging "fair counterproposals."

"I think our message is getting through," Sullivan said. "I think there's recognition for the need. Now, it's a matter of figuring out the mechanism, and what the commitment is from Highmark to meet the needs of the community."

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Welcome to Buffalo Next. This newsletter from The Buffalo News will bring you the latest coverage on the changing Buffalo Niagara economy — from real estate to health care to startups. Read more at BuffaloNext.com.

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THE LATEST

Catch up on the latest news from the Buffalo Niagara economy:

Plans to make big changes to how New Yorkers heat their homes were backed by a state-appointed council as part of a sweeping plan to reduce the use of fossil fuels.

M&T Bank is selling a portion of its Wilmington Trust business.

A Buffalo contractor has a plan to build 40 apartments and retail space near the intersection of Elmwood Avenue and West Tupper Street.

Douglas Jemal has scooped up another highly visible downtown Buffalo property.

Catholic Health may not have a deal with Highmark, but it has one with Independent Health.

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Buffalo Niagara businesses keep hiring slowly, but there are some concerning signs on the horizon.

An Invest Buffalo Niagara report takes stock of the region's workforce.

Officials from Oishei Children's Hospital are hoping Gov. Kathy Hochul approves their designation as a safety net hospital.

D'Youville University is planning to expand its health care programs with a $50 million building project.

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ICYMI

Five reads from Buffalo Next:

1. Inside 43North company Big Wheelbarrow's decision to stay in Buffalo: Since Big Wheelbarrow moved from Austin, Texas, to Buffalo in January 2022, the company has facilitated more than $3 million in local food transactions on their platform.

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4. New life for old stones: How a Buffalo company is finding new uses for old bricks and stones in construction projects.

5. Big changes are being proposed for the state's energy markets, and it could change the way residents heat their homes and cook their food in the years to come.

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The Buffalo Next team gives you the big picture on the region's economic revitalization. Email tips to [email protected] or reach Deputy Business Editor David Robinson at 716-849-4435.

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