photo by: Ashley Golledge/Journal-World File Photo

The emergency entrance to Lawrence Memorial Hospital is shown in this file photo from Jan. 26, 2018.

Negotiations that would keep a Lawrence-based company running the day-to-day operations of LMH Health’s emergency department continue but still have some thorny issues to resolve.

One of them involves how large of a bill patients to the hospital’s emergency department may ultimately receive.

The hospital’s board of trustees on Wednesday received an update on negotiations between LMH Health and Lawrence Emergency Medicine Associates.

“There are some areas where we are working through it,” Russ Johnson, president and CEO of LMH Health, told the board. “I don’t think it is overly contentious, but I think we still have some finagling to do and some agreeing to do.”

Dr. Scott Robinson, president of LEMA, also said he thought negotiations were moving forward, but said what he viewed as recent changes to the hospital’s negotiating position have created concern for him. Still, he said he’s aiming to have a new agreement ready to sign by the end of September.

An issue that has been a hot topic in national health care policy has emerged in the local negotiations. It is the practice known as “balance billing.” That refers to a situation where a patient, for instance, goes to LMH’s emergency department and receives one bill from the hospital itself for the services the hospital provided, such as the drugs, supplies and the care provided by nurses, who are employees of the hospital. The patient also will receive a bill for the services provided by the actual doctors or other advanced caregivers, who are employees of LEMA.

Currently, patients to LMH’s emergency department don’t receive separate bills for those types of services. LMH does all the billing and then pays the LEMA doctors. Under the proposed agreement, LEMA would be responsible for doing its own billing for its own services.

That creates a situation where some insurance companies may consider the LMH hospital in-network, but consider the emergency room doctors employed by LEMA as out-of-network. In those instances, LEMA could “balance bill” the patients in an effort to recover a large part of the money it would have expected to receive had the bill been covered by the patient’s insurance provider.

LMH, however, wants to take a hard line against such balance billing practices by LEMA.

“We need to be steadfast about balance billing and make sure our patients don’t get untoward surprises,” Johnson told the board.

Some board members applauded the stance.

“I’m very uplifted that you are looking out for health care costs, because no one wants a surprise bill,” Bob Moody, a hospital trustee, said.

Robinson, though, said it would be problematic for LEMA to commit to never undertake balance billing without additional guarantees from LMH. He said he is “philosophically opposed” to balance billing and doesn’t think “it is something patients should have to deal with.”

But he said the proposed contract with LMH puts LEMA in a delicate position with insurance companies. Since LEMA is taking over its own billing services, it will have to negotiate contracts with each insurance company rather than relying on contracts LMH has with the insurance providers. Robinson said if LEMA is prohibited from doing balance billing, it puts LEMA in a weak negotiating position with the insurance providers.

Robinson said LEMA would agree to prohibit balance billing if the hospital agrees to make up for shortfalls in what insurance companies pay for emergency department services. He said the LEMA wants to be paid 300% of Medicare rates, which are traditionally among the lowest rates providers are paid.

“Somebody has to figure out a way to get reasonable payment for what is provided,” Robinson said.

Robinson said that guaranteed level of payment for services is one of the major hurdles left in the negotiations.

However, Wednesday’s update did indicate progress had been made on other financial aspects of the deal. LMH has agreed in principle to provide an annual subsidy of up to $600,000 per year to LEMA, if revenues from the emergency department fall below certain levels. The hospital also has agreed in principle to provide a $500,000 short-term loan to LEMA, in the event that it is needed for cash flow reasons as LEMA sees a decline in revenues while it negotiates with insurance providers.

LMH board members, though, did push back some on whether the hospital was giving too many favorable terms to LEMA.

“In business, there is always a risk/reward balance,” said Cindy Yulich, a local banker who also is the chair of the hospital board. “As I think through this, I’m not sure the risk and the reward is very balanced. It seems like the hospital has all the risk.”

Robinson, who did not participate in Wednesday’s meeting, said he didn’t agree with that assessment. He said LEMA is in an unordinary business situation because there aren’t traditional business ways to grow the number of patients that the emergency department treats in a year.

He said many of the subsidies and terms of the proposed agreement are the result of Lawrence being a mid-size emergency department. Patient volumes — about 36,000 per year — are too high for a single doctor to routinely cover cases during a normal shift. But patient volumes aren’t high enough to always produce enough revenue to cover the time of multiple doctors on a shift.

“It is the opposite of a sweet spot,” Robinson said.

The problem is compounded by community expectations that the emergency department is staffed at a level to handle unpredictable surges in volume.

“Whether we see one patient or a thousand, we have to be ready for the worst-case scenario,” Robinson said. “That’s what we want to do, but it is costly.”

Earlier this year, many members of the public and the hospital’s medical staff rallied around LEMA when the hospital had tentatively to decided to end its contract and work with an out-of-state provider that is owned by a large hedge fund. Community members flooded the LMH board with comments about the importance of having a locally based provider run the emergency department.

Johnson told the board he remains cognizant of that desire and believes it will help drive a deal to completion, although he said it still has to make financial sense for the not-for-profit LMH.

“We have a responsibility to be stewards of this charitable enterprise, but we also need a principle around loyalty, longevity and community,” Johnson said. “That is worth a premium.”

In other news, the board of trustees heard a brief update on plans for LMH to find a strategic partner. Board members were told that LMH is now focusing its search for strategic partners on three specific types of service providers: cardiology, oncology and orthopedic care.

The hospital has agreed to add three physicians — one from each of those specialty care areas — to an internal committee that is exploring partnership opportunities.

Hospital leaders said LMH will to continue to be an independent, community-owned, not-for-profit hospital regardless of any future partnerships. Hospital leaders have said they are not interested in entering into a equity or governance partnership with any entity.