Phoenix Children's, one of the nation's largest pediatric health systems turned down an $80 million offer from one of Arizona's largest health insurers in a heated contract dispute.
Blue Cross and Blue Shield Arizona, or AZ Blue, had been negotiating with Phoenix Children's since January on a contract to provide health insurance coverage to patients at the pediatric health system across Arizona by an Oct. 30 deadline.
The contract expired and a new agreement is unlikely, according to a statement sent to the Business Journal on Oct. 31 from Phoenix Children's, which said the health system rejected the insurer's offer.
In its response, Blue Cross Blue Shield officials were direct: "We're baffled. Phoenix Children's just turned down an $80 million raise [over three years]."
However, Phoenix Children's said that the offer is closer to $43 million when accounting for several factors, including wrongful denials.
The health insurer denies more than 10% of claims submitted by Phoenix Children's, resulting in annual reductions of $21 million and growing, according to the Phoenix Children's statement.
If the two sides don't come back to the table and hammer out some type of agreement, members of AZ Blue will lose access to in-network benefits at Phoenix Children's 50 sites of services statewide.
Read the full article from the Phoenix Business Journal.
Phoenix Children's Hospital sent the following statement to ABC15:
"Phoenix Children’s contract with BlueCross BlueShield expired on October 30, 2024, and a new agreement is unlikely. Yes, we turned down BlueCross BlueShield’s offer, and here’s why.
BlueCross BlueShield’s fictional offer of $80 million is closer to $43 million when we account for several factors including wrongful denials. BlueCross BlueShield denies more than 10% of claims submitted by Phoenix Children’s, resulting in annual reductions of $21 million and growing.
This includes frequent arbitrary denials of medically necessary services, causing undue stress, worry and delays for the families we serve. Despite our multiple requests, BlueCross BlueShield is unwilling to have a qualified, independent pediatric physician review the claims before denying services or payment. We cannot allow this to continue.
We also said no to BlueCross BlueShield’s scheme to move families to restrictive, narrow networks and their exclusion of Phoenix Children’s from the state-wide PPO network. Such network limitations would have a devastating impact on families and force them into restricted coverage and access to quality services.
In addition to restricting access to its members, BlueCross BlueShield wants to make unilateral changes to the contract terms and rates after the contract has been agreed to and signed. We cannot allow BlueCross BlueShield to unilaterally amend and implement new contract terms and rates without the mutual written consent of both parties.
Instead of negotiating in good faith, BlueCross BlueShield left the contract discussions early and is spending time disseminating false information to alarm patient families and avoid discussing contract language that fundamentally impacts the health of their members.
As with previous contract discussions – where we have successfully fought for our patients – Phoenix Children’s is focused on ensuring payer agreements put kids first and address the specialized nature of pediatric healthcare.
Phoenix Children’s participates with all major health plans except BlueCross BlueShield, so our patients and families have other choices to ensure their access to care. In this open enrollment season, many patient families have options and we encourage them to review a list of in-network plans on our website."
