Legacy Health is asking for a bigger raise than Oregonians can afford

By Regence
February 21, 2024

Regence is working hard to hold the line on the rising cost of care

The following is an opinion editorial written by Zak Ramadan-Jradi, MD, MBA; head of network management at Regence.

Zak Ramadan-Jradi, MD, MBA; head of network management at Regence
Zak Ramadan-Jradi, MD, MBA; head of network management at Regence

One of our main jobs as a health insurance plan is to negotiate treatment costs with hospitals, clinics and other providers on behalf of our members. In recent negotiations, some providers in Oregon and across our geographic footprint, including Legacy Health, are demanding unrealistic increases in what we pay them for our members’ care. If we agree to Legacy’s demands, Oregon families will face unreasonable out-of-pocket costs and employers – local Oregon businesses – will pay more for their employees’ health care. 

Payers and providers in our region and across the country are having challenging conversations about the increasing cost of health care. Legacy publicized its contract termination as a negotiation tactic, putting patients in the middle and causing unnecessary stress to Regence customers and members. Oregonians deserve better.  

As a nonprofit health plan, we reflect costs in the health care system, and hospitals are already the largest driver of U.S. health care spending. They currently charge health plans more than two times what they charge Medicare for the same services. A new study also found hospitals charging a 300 percent markup on cancer and specialty drugs. As our members and customers ask us to rein in the cost of care – and our regulators demand it – we’ll continue holding the line on Legacy’s unsustainable price increases.  

When it comes to managing rising health care costs, payers and providers can collaborate on increasing preventive care such as routine doctor's visits, screenings, and immunizations, which can help avoid more costly treatments down the line. We can also focus on agreements where doctors are reimbursed not for the number of services they provide, but on positive patient health outcomes. Legacy claims reimbursements haven’t kept up with rising costs, but what they don’t mention is reimbursements have lagged because they’ve failed to meet agreed-upon targets for high-quality care. Regence offered increases in what we pay for care if Legacy agreed to quality improvements. They refused.  

As a doctor, I understand the challenges many of my colleagues in hospitals endured the past few years. We’ve had a longstanding partnership with Legacy, and we value their doctors, nurses and medical staff. Our employer customers also want their frontline workers to be paid fair, equitable wages, but the unreasonable increases in the cost of health care are an unfair burden to their business. Legacy cites a 24 percent increase in its operating expenses. It’s important to note, Legacy took $171 million in taxpayer dollars during the COVID-19 pandemic through CARES Act funding. 

Our premiums are based on what we expect care to cost. We’re legally required to charge rates that balance insurance risks and premiums while ensuring financial stability to continue paying member claims. These double-digit cost increases coming from not just Legacy, but also other providers hinder the state’s goals to make health care more affordable and they threaten access to health care.  

We’re keenly aware that our negotiations carry real, human consequences. A national poll found that 38% of adults delayed getting care in 2022 because of cost concerns. This isn’t a one-player game. It’s a dedicated team effort that shouldn’t involve creating unnecessary strain on Oregon families and businesses. It’s going to take all of us working together to make a safer and healthier Oregon.