Daniel Kane, BMC chief executive officer; Vivek Garipalli, the hospital's principal Owner, and Board Chairman Jim Lawler, said the hospital can continue to honor patients' insurance (and co-payments) while attempting to negotiate with the insurance companies for better reimbursements.
In other words, a patient entering the hospital can still pay the regular co-payment as previously honored. The insurance company should provide the usual reimbursement.
Speaking to an audience of 200 in the Dorothy Harrington City Council Chambers on March 27, hospital officials said they have terminated contracts with Aetna, Americhoice, Consumer Health Network, Galaxy Health Network, Multiplan, Oxford, and United Healthcare.
Garipalli explained that these insurance companies have not offered rates that can sustain the hospital. He said that the hospital needs insurance contracts that will cover its costs and keep it out of bankruptcy.
BMC emerged from Chapter 11 bankruptcy on Feb. 1 after a company called IJKG, LLC purchased the facility. The new company cancelled previous contracts with the insurance companies in order to negotiate better agreements, they said.
In mid-February, Aetna and Oxford/United Healthcare sent letters to residents saying Bayonne Medical Center is no longer in their network and advised their members to seek other area hospitals that are in network.
"Some of our doctors have also been contacted," said BMC former Chairman Ruth Dugan.
Two weeks ago, Aetna sent out new letters to patients saying that the hospital won't even accept their insurance over the next few months while they negotiate. However, the hospital said that this is not true.
How it works
Insurance companies sign contracts with hospitals and doctors in order to control the costs of medical services. These contracts set a rate that the hospital or doctor will charge - usually a low rate. Insurance companies, in turn, send their membership to these healthcare providers.
Members get to pay lower rates as a result of these agreements.
Garipalli said BMC would honor the lower rates charged to patients despite the lack of contracts with the insurance companies.
He said BMC would bill the insurance companies for the full costs of services. He said with no contract, the insurance companies are obligated to pay the full cost for each patient that seeks service at BMC.
Garipalli invited patients to continue using Bayonne Medical Center for both emergency and non-emergency care. He said that if it is an emergency, the hospital is obligated to provide care. In non-emergencies, he said that patients would need to obtain prescriptions from their doctors for hospital services, exactly the same as what happened in the past.
Lawler assured residents that the hospital's non-contracted status with private health insurance companies will not affect Medicare patients.
Insurance companies acting out of self-interest
Garipalli said that the insurance companies want to redirect patients to other hospitals, with whom the insurance companies have negotiated reduced rates for patients' services. This would save insurance companies money on the care the patients receive.
Kane said that Bayonne Medical Center's management has met with the vast majority of local physicians in order to ensure that patient-doctor relationships would not be adversely affected by the insurance companies.
Garipalli confirmed that the hospital is currently in negotiations with several non-contracted insurance companies. In those talks, the hospital's goal is to obtain rates from the insurance companies that would reimburse the hospital properly for the care that patients receive there.
All of the hospital representatives said that Bayonne Medical Center would continue negotiations with the insurance companies until those firms agree to more favorable reimbursements.
Insurance companies respond
Mary Mcelrath-Jones, a spokesperson for Oxford/United Healthcare, said no negotiations are currently underway with her company.
Susan G. Millerick, a spokesperson for Aetna, said letters issued to providers were not an attempt at intimidation.
"We have to do it under law," she said. "The Bayonne Medical Center has had a long and positive relationship with Aetna, and we regret that the current owners of the facility do not wish to continue this relationship."
Aetna has had contracts with BMC since 1992, and both agreed to a five-year contract in March 2006. Joe DiRienzo, vice president of Network for Aetna, said this contract was cancelled on Feb. 1.
While BMC and Aetna have exchanged proposals for a new contract, DiRienzo said the amounts proposed by BMC are unreasonably high. Aetna has given BMC a counter-proposal and is currently awaiting a response.
"We would remain open to a reasonable proposal, and we would consider a higher [rate of reimbursement] that we can work with," he said.
Under normal conditions, state law requires a four-month cooling off period, DiRienzo said.
This means if a contract is cancelled on Feb. 1, both sides honor the existing contract for four months so that nothing would change until June 1, giving both sides time to renegotiate.
But DiRienzo said BMC has refused to honor the four-month provision, and has refused to honor the existing contract after April 1.
"From our perspective, we remain hopeful to reach an agreement," he said. "But if they choose to stay out, we must encourage our membership to use in-network providers, which usually have lower costs."
While BMC may offer to hold costs to the same level, a contract would bind them to that promise, said DiRienzo.
"We do not want to frighten people, and we will do all we can to make certain our members are fully protected," he said. "Regardless of what they choose, we will still be there for them."
BMC says it will continue to honor agreements with patients
Garipalli said patients could continue to come to BMC at the same costs and that a special hotline number has been provided to help patients with questions about billing.
"Insurance companies do not bill patients for medical services; Bayonne Medical Center does," he said. "If you have a problem, come to us."
The insurance companies do send patients statements that are called explanations of benefits, Kane said. Anyone receiving a bill for health services from an insurance company should notify the hospital at once.
Kane said that if patients receive bills from the hospital that seem to be too high, they should refrain from paying the bill and then contact the hospital. He invited patients to send such bills to him at Bayonne Medical Center, 29 East 29th Street, Bayonne, N.J. 07002.
Some employers have self-funded health plans that are administered by non-contracted companies. The hospital executives encouraged those employers to contact plan administrators to discuss a discounted billing agreement with the hospital. The telephone number for the help desk is (201) 858-7342. The backup number is (201) 858-7651.
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