photo by: LMH Health

LMH Health, 325 Maine St., is pictured in May 2021.

Story updated at 5:49 p.m. Wednesday:

The state’s largest health insurance company and Lawrence’s only hospital are in contentious contract negotiations that may result in LMH Health no longer accepting Blue Cross Blue Shield of Kansas as a preferred provider.

Leaders of LMH Health on Wednesday warned area residents that there is a real possibility in 2022 that the hospital and its doctor’s offices won’t be part of the BCBS of Kansas network. The unusual announcement comes as LMH and BCBS of Kansas are negotiating a contract about what the insurer will pay LMH for all the services it offers.

As the Journal-World has reported, the two sides have struggled to reach an agreement, and members of LMH’s nonprofit board of trustees were told Wednesday morning that a deal may not be in place by next year. Being out of network would cause BCBS policyholders to pay significantly more for care at LMH.

“We need people to understand that being out of network with Blue Cross is going to be challenging,” Russ Johnson, president and CEO of LMH Health, told the board.

If LMH were not included in the BCBS network, it likely would impact thousands of households in Douglas County. BCBS of Kansas is the largest health insurance company in the state, and it is a big part of the state of Kansas’ employee health plan and one used by the University of Kansas.

LMH and BCBS leaders both stressed that negotiations are ongoing, and that both sides hope the hospital will be part of the network in 2022. But on Wednesday, LMH leaders weren’t willing to express confidence in such a deal.

“We hope to be in the network,” Bob Moody, chair of the LMH Board of Trustees, told the Journal-World. “But at this point, it is, well, we wouldn’t be at this point if we were certain of it.”

Instead, LMH said it is giving fair warning to area residents, many of whom are currently making decisions about what health care plans they will have in 2022. Many state employees have until the end of the month to select a health care plan for the next year. The state and KU both offer plans from BCBS and a competitor.

In a statement likely to draw attention at the negotiating table, one LMH board member even made a special point to note that state or KU employees who already have selected BCBS for 2022 could still switch to a different provider as long as they did so before the end of the open enrollment period.

“They don’t seem to be negotiating with us, or perhaps other hospitals, fairly,” said Jim Brooke, an LMH board member and retired state and KU employee who said he was planning to shift his personal insurance, absent an agreement.

BCBS of Kansas officials were not part of Wednesday’s LMH meeting, but in a statement to the Journal-World they said they were working to treat LMH fairly, but believed the hospital and its physician offices were seeking increases in payment schedules that simply are too aggressive.

“Lawrence Memorial Hospital has served their community well for many years and we have appreciated their partnership in delivering care to our members,” Katrina McGivern, manager of corporate communications for Topeka-based BCBS of Kansas, said in a statement. “Unfortunately, our contract discussions have not yet resulted in a mutually beneficial agreement.

“Their demands this year have been a dramatic increase to previous years and would amount to millions of dollars in additional costs to the people of Douglas County. It is our responsibility to ensure healthcare is affordable for our members. We plan to continue negotiations to ensure LMH remains in network and want them as a continued partner. We will not rest until that happens.”

The cost debate between the two organizations first came into public view in November, when LMH leaders told the hospital’s board of directors that they were concerned about LMH’s future relationship with BCBS of Kansas. At that time, LMH leaders said they were concerned BCBS wanted to revert to a rate plan that would pay the hospital at levels similar to what it received in 2014. At that time, LMH was negotiating a 2021 contract with BCBS, which ultimately was completed. That contract is set to expire at the end of the year.

In November, the hospital said it expected BCBS’ proposal would produce a $4 million reduction in 2022 revenues compared to 2020, with the potential for the losses to be even greater. At the time, LMH said it received about half of all of its commercial — nongovernment — revenue from BCBS of Kansas payments.

On Wednesday, it wasn’t clear how much negotiations had progressed in recent months, but Johnson expressed disappointment about how the talks were going. Johnson said the last four years of negotiations with BCBS of Kansas had become more difficult with LMH receiving declining reimbursements from the insurance provider. Johnson told the board it is important for LMH to receive different results in 2022.

“We have to remain committed to this idea of fair and reasonable in our approach to 2022,” Johnson told the board. “Although we have been in these conversations for some months, we find ourself at this moment really not being close to fair and reasonable.”

Board members at Wednesday’s meeting gave strong backing to the position LMH administrators are taking in the negotiations.

“These are serious times, and we are committed as a board and as an institution to serving the long-term best interests of the community members,” LMH board member and former state legislator Tom Sloan said at the meeting.