How Regence fights to keep care affordable for you during provider negotiations

By Regence
dad and daughter at grocery store

Regence serves more than 3.4 million people through its health plans in Idaho, Oregon, Utah and Washington, and our top priority is to ensure you have high-quality, affordable health care.

Yes, affordable.

Health care costs continue to rise, and we know we must do our part to control those costs where we can. Our members and customers depend on us to be a strong advocate.

One important way we try to deliver savings is through our strong network of providers. We negotiate with providers for discounted rates that ensure you can get the care you need at a reasonable cost. Unfortunately, this is significantly more challenging because some hospitals and health systems are demanding double-digit price increases – and relying on strong-arm negotiating tactics – which makes it near impossible to keep care high-quality and affordable.

Sometimes our negotiations end up in the headlines, which can be unsettling for our members. Because of this more challenging environment, you might hear about more negotiations than usual. We want you to understand what we’re doing to keep health care accessible, affordable and effective in the midst of these unprecedented financial demands.

1. Why are the contract negotiations with hospitals so difficult?

Hospitals and insurance companies generally sign multi-year contracts that determine the rates that the insurance company reimburses the hospital for providing member care. Some providers in the states we serve are issuing termination notices on these contracts and threatening to pull out of the Regence network if we don’t agree to their demands in a very short amount of time. Rather than negotiate in good faith on a new contract, these providers are threatening the accessible, affordable care that patients, families and communities rely on. Sometimes they take these negotiations public prematurely, creating significant and unwarranted anxiety for local communities who worry they will no longer be able to receive the care they need.

Some providers have timed these termination notices during the holiday season or during open enrollment, which causes members even more disruption and stress.

2. What do the hospitals want?

Hospitals and health systems want double-digit increases in what Regence pays them for member care. Hospitals are already the largest driver of U.S. health care spending, charging employer health plans and private insurers more than two times what they charge Medicare for the same services. But now they want even more, citing economic challenges.

We recognize financial pressures facing hospitals, and we deeply appreciate the work of frontline health care workers, but our members are also facing financial pressures and shouldn’t have to weather increased premiums and out-of-pocket costs because of hospitals’ unprecedented demands. Many hospitals took millions of dollars in taxpayer money during the pandemic and are now back to profitability – some even have new buildings or other expansion in the works – and yet they still make unreasonable demands. At Regence, we work hard to balance the need to pay doctors and nurses fairly for the care they give our members, while ensuring that our health plans continue to be affordable for local businesses and independent consumers. Instead, hospitals are asking our members to shoulder the costs of the hospitals’ system operational inefficiencies.

If providers get the rate increases they are demanding, the cost of many procedures, from having a baby to undergoing a heart bypass, would go up by thousands of dollars per procedure. Because insurance premiums are based on what we must pay providers for care, these exorbitant costs would ultimately fall on businesses and patients.

3. What is Regence’s mission in provider contract negotiations?

Our goal in negotiating contracts with hospitals and health systems is the same goal that guides everything we do: keep health care accessible, affordable and effective for the members we serve. This includes standing up to health system leaders who demand increases many times higher than historical increases. When the cost of health care goes up, so does the cost of health insurance.

Regence owes it to the members and employers we serve to ensure that their health care is affordable and efficient. In keeping with our values as a tax-paying nonprofit, 85 percent of every premium dollar from our members pays for our members’ medical claims and expenses. That includes doctor visits, hospital care, medications, and other health care goods and services. In 2022 alone, Regence paid $5.52 billion in medical care for our fully insured members.