New York-Presbyterian, Empire BCBS contract dispute thrusts union workers into the crossfire

The 4 million New Yorkers enrolled in Empire Blue Cross and Blue Shield, including many municipal and union workers, could soon lose their insurance coverage at New York-Presbyterian’s 10 hospitals and expansive physician network. The two have yet to agree on terms to renew their contract, set to expire May 31.

Empire is already preparing for the possibility. If a deal isn’t reached by the end of this month, the health plan will send fully insured members the state-required 30-day notice that New York-Presbyterian facilities and doctors may be out-of-network starting June 1.

Members of Empire’s commercial, Medicaid and Medicare Advantage plans would be affected, as well as its federal employee program and national accounts. As of 2018 about 300,000 New York-Presbyterian patients used Empire.

In an emailed statement, a spokeswoman for New York-Presbyterian said Empire is pressing for “steep payment cuts” even as the system has incurred more than $650 million in unreimbursed losses during the COVID-19 pandemic. She did not provide further details on the proposed cuts, which Empire spokeswoman Alessandra Simkin called “simply not true.”

Empire has already spent several months negotiating with New York-Presbyterian, said Simkin, who declined to elaborate on the proposals. The current contract dates back to 2018.

“At this time we remain committed to reaching a new agreement with NYP, which we hope will be long-term,” Simkin said. “We understand that our clients are concerned about NYP’s costs and some of their practices, and we are attempting to address those concerns in our negotiations.”

Contract negotiations are typically private, shielded by confidentiality agreements between health systems and insurers. Some details have spilled into public view thanks to the union health funds that use Empire to build their hospital network.

Local 32BJ of the Service Employees International Union, whose members include cleaners, doormen and security guards, provides benefits to 135,000 New Yorkers. Sara Rothstein, director of the union’s self-insured health fund, said about 23,000 use New York-Presbyterian.

The union has allied with more than a dozen others in New York City to demand a “fair contract” between Empire and New York-Presbyterian that lowers prices at “the city’s most expensive hospital system,” read a full-page ad in Monday’s New York Times.

Rothstein said New York-Presbyterian charges 32BJ’s health fund thousands more than other hospitals and several times the Medicare rate for services like colonoscopies. In 2019 the fund spent $124 million on services through New York-Presbyterian. Members also pay higher copays there, after the system previously declined to lower prices for the health fund.

Still, New York-Presbyterian—U.S. News’ top-rated New York hospital—is one that health plans want in their network, Rothstein said. Patients face even larger bills when they seek out-of-network care.

In March 32BJ wrote directly to New York-Presbyterian CEO Dr. Steven Corwin to ask the system to, among other things, lower prices for its union members and make public their negotiated rates.

Senior Vice President Dov Schwartzben responded in an email, obtained by Crain’s: “We do not think it’s appropriate to discuss with you terms and conditions of any agreement NYPHS Hospitals may have with any insurer or third-party administrator to which 32BJ is not a party.”

Some of the city’s largest health care providers have butted heads with insurers in recent years. A similar clash between UnitedHealthcare and Montefiore Health System reached an impasse this year, after Montefiore requested a nearly 30% rate increase over three years for commercial members. United dropped Montefiore’s hospitals and physicians from its network.

Kenneth Raske, president of the Greater New York Hospital Association, said faulting hospitals for failed negotiations with insurers is “blaming the victim” and called the criticism of hospital prices a straw man argument.

“The reason you’re seeing more stymied activity is the insurers are looking for greater profits on Wall Street,” Raske said.

Opponents argue hospitals are looking to make more money too. Union members, such as those with 32BJ, get caught in the middle, they say.

“We have a system where big, moneyed hospitals are able to prioritize them making money over taking care of 32BJ members and New York’s working families,” Queens Sen. Jessica Ramos said.