Premera negotiates with our contracted healthcare provider partners on a regular basis. Some provider contracts are annual, and some span multiple years. Nearly all renewal negotiations conclude successfully and well before the contract end date, and allow our members continued access to affordable, quality care. Typically, these are done as a normal part of our everyday business and out of the public eye.
1. What is the negotiation process?
Members count on us for access to their preferred healthcare providers. Our intention is always to reach new agreements quickly and out of the public eye because we understand news of potential disruptions causes unnecessary anxiety and confusion. Premera’s guiding principles for negotiations:
- Work in good faith with our health system partners
- Reach an agreement that fairly compensates the health system
- Ensure our members have access to quality care at an affordable price
At times, we receive only the required 90-day notice. Sometimes we’re given a longer notification. When a provider issues a notice of termination of their contract, we must inform the Washington state Office of the Insurance Commissioner (OIC) within five days of receipt. That notification is a matter of public record.
2. Why are providers sending termination notices?
Sometimes, a healthcare provider will issue a termination notice during a negotiation. In fact, what used to be a highly unusual move has now become the norm in 2023. Every health system Premera has negotiated with this year has issued a termination notice.
We believe termination notices should not be issued lightly. Issuing a termination of contract notice upfront is unusual. Since the COVID-19 pandemic, we’ve seen this become a standard negotiation tactic. Because a termination notice comes with required regulatory notifications, these negotiations are then brought to the public’s attention and cause unnecessary angst among our members. Customers are put in the middle when negotiations play out in the public arena, using a possible termination as a ploy.
3. Why doesn’t Premera just pay the rate asked?
Rising healthcare costs pass directly to our participating employers and their employees. This is why Premera advocates so hard on our customers’ behalf – our role is to be a good steward of their dollars and ensure continued access to quality healthcare.
We know healthcare systems across Washington – and the country – are facing unprecedented financial pressures. Health plans are also experiencing cost pressures. That includes increased claims costs associated with needed medical treatments delayed due to the pandemic. The current economic environment in the healthcare industry is challenging for everyone. Washington businesses and Premera aren’t immune from serious financial pressures. We want to do our part, but we will not accept unreasonable rate increases that will further drive-up costs for customers.
4. What if I need to go to an emergency department? Will I be billed more?
Visits to emergency departments are covered under the Federal No Surprises Act (FNSA). That means that the emergency provider receives payment from your health plan and cannot bill you for the difference, sometimes called balance billing. You may, however, be responsible for cost shares and deductibles.
5. Do I need to do anything?
First, keep in mind that nearly all of these contracts are renewed before the termination date. If talks stretch to within 30 days of the end of a provider contract, we will notify members, providing transition information and additional support for members with serious or chronic conditions. We will also share updates on the status of negotiations on our Healthsource blog.
You can continue to receive care from your current provider through the end of their contract. In some cases, members may continue to receive care after the contract ends if they have a chronic condition or are in the midst of treatment. This is called continuity of care.
As we’ve always said, negotiations are not about Premera; they are about our customers. We serve as their advocate during these discussions. We seek practical solutions to keep healthcare affordable and accessible.
Our unwavering commitment is to reach agreements that fairly compensate our provider partners and ensure our members retain uninterrupted access to quality, affordable care.
What do “in-network” and “out-of-network” mean? Can I change my network?
In-network means that the provider you are seeing currently has a contract with Premera, and you are typically only responsible for cost shares and deductibles. An out-of-network provider doesn’t have a contract with Premera, and you may be responsible for all charges, including cost shares and deductibles.
You can learn more about the types of networks health plans offer by visiting our Provider Networks page.
What if a member is currently receiving care and their provider is no longer in the network?
Some members may be able to continue their care at their current provider at the current in-network benefit level for up to 90 days if they’re receiving treatment for a covered service or for a complex or chronic medical condition. Such conditions include pregnancy or scheduled nonelective surgery. Members can contact customer service at the number on the back of their ID card for more information about this process.
What happens if my surgeon is out-of-network, but my surgery is at a hospital that is in-network?
In most situations, if your surgery is scheduled at an in-network hospital, even if your surgeon or others assisting with your surgery is out-of-network, all bills will be covered at a specific payment rate, and you cannot be balance billed. You may, however, be responsible for cost shares and deductibles.
How do I know if this negotiation impacts my current provider?
We will post information about current provider termination notifications on our Healthsource blog. You can use our Find a Doctor tool to find information about your primary care provider’s associated facilities. Or call us at the phone number on the back on your ID card.
How do I find a new provider?
- To find a new provider in your network, sign into your account on Premera.com. Under Find Care, search the Find a Doctor tool.
- If you need to find a new, in-network primary care provider, consider Kinwell primary care. Kinwell offers high-quality care just for Premera members in Washington. Same-day or next-day appointments are available in-person or virtually. Find out more at kinwellhealth.com.
Where does my premium money go?
The law requires us to spend at least 80 cents of every premium dollar directly on the care of members. If we do not meet that threshold, we refund the money back to members, either through rebates or lower premiums. In an average year, Premera spends 90 cents of every dollar we receive in premiums on our members’ claims. After that, 8 cents goes to commissions and administrative expenses, and 2 cents goes to taxes. Premium rates may increase due to higher claims expenses. After a three-year pandemic had a hold on most healthcare, these expenses have jumped dramatically. Our profit margin is 1-3% in a typical year.
Premera pays all other expenses after members’ care; that includes the cost of administering member claims, investing in technology and improvements to the care delivery system, and the salaries and benefits for all our employees.
What type of increases are providers demanding? Can you tell me more about the negotiations?
Specific details, including financial discussions, are confidential. What is important to note is that every healthcare system is asking for increases, some as high as 30%. We take those requests seriously. Our goal is to reach an agreement that fairly compensates the healthcare system and ensures our members have access to quality care at an affordable price.
Will Premera customers incur increased costs due to higher rates at other health systems?
Premera works diligently with our provider partners to reach agreements that provide reasonable reimbursement rates and ensure our members access to affordable, quality care. Costs for different health systems differ for various reasons, including location, cost of doing business, and other factors. It is a false assumption that members will pay more if they go to another care provider or facility.
While difficult, these negotiations allow us to look for shared opportunities to reduce costs. We serve as your advocate during these discussions. It is important to remember that Premera’s role is to be good stewards of our customer’s dollars. However, that does not mean we don’t want to find reasonable solutions to address rising healthcare costs.
Learn more about the contract negotiation process, finding a doctor, and continuity of care in these videos: