This story has been updated with additional comment from Regence.
Salem Health will stop accepting Regence BlueCross BlueShield of Oregon insurance after contract negotiations between the two companies collapsed.
Starting Feb. 24, thousands of patients in Marion and Polk counties covered by Regence will have to find care outside of Salem Health’s network of providers, switch insurance or pay out of pocket. Salem Health operates Salem Hospital, West Valley Hospital and other clinics in the mid Willamette Valley.
The rupture announced Wednesday comes after more than a year of talks between Salem Health and Regence that failed to produce an agreement on reimbursement rates for care. Contract disputes between insurers and providers have increasingly spilled into public view in recent years as each side has grappled with rising medical costs.
Both sides issued statements faulting each other for what they described as unreasonable positions that tanked negotiations. Both sides also disputed basic facts of the situations.
Salem Health claimed that 30,000 members in Marion and Polk counties would be affected. Regence said that figure counted people from outside the area or who were no longer eligible. Additionally, Regence claims they did not receive any formal proposal from Salem Health until July 2024.
Salem Health’s announcement blamed Regence for not budging during negotiations and offering only a 1% compromise from its original offer on rate increases, which the provider described as being inadequate to cover costs. Preparing for the split, Salem Health is reaching out to patients to help them transition, which includes some who are in the middle of cancer treatments. Salem Health stated in its announcement that it would stop accepting Regence to protect patients.
“We understand this decision will be difficult for our patients who are BlueCross BlueShield members,” Cheryl Wolfe, Salem Health president and CEO, said in a statement. “We have worked so hard to find an alternative path with Regence and are so deeply frustrated and heartbroken that this is where we are.”
Zak Ramadan-Jradi, Regence head of network management, told The Lund Report that Salem Health was asking for a 40% increase, which he described as “unrealistic and unsustainable.” Regence offered an increase of more than 1% and asked for quality of care assurance in the contract, Ramadan-Jradi said. That it is because the company is keeping in line with a new state law intended to keep per-capita health care spending from rising more than 3.4% annually, he said.
He also said that Regence is still processing claims and ensuring that members’ care is not disrupted.
The contract between the two expired on Jan. 1. Salem Health had requested that Regence continue paying for patients’ care as both sides continued negotiating. However, Salem Health claimed that Regence continued to cover treatment for fewer than 400 patients, leaving the rest with no access or large bills.
Ramadan-Jradi also disputed Salem Health’s characterization that the contract expired. Instead, he said that the contract would have rolled over, allowing Regence members to continue to access care at Salem Health while the two sides negotiated the deal.
“We have the desire and intent to stay there,” he said. “We are really willing to reconnect with Salem Health as long as it is a reasonable offer.”
Additionally, he said both sides agreed on rates for the more than 3,000 Regence Medicare Advantage members in Marion and Polk counties, but Salem Health did not finalize the deal.
Salem Health spokesperson Michael Gay provided The Lund Report with a portion of the contract showing that it expired on Dec. 31, 2024. He also said that while both sides reached an agreement on Medicare Advantage rates, they could not be implemented without a broader contract.
James Parr, Salem Health’s chief financial officer, said in a statement that the provider had renewed contracts with 15 other insurers. He encouraged Regence members to change their insurance if they could.
In the meantime, most Regence members can continue receiving care at Salem Health facilities. A post on Regence’s website states that for non-pregnancy conditions, members can continue to receive care for 120 days they are notified or until the last treatment is completed.
Salem Health operates Salem Hospital, the only hospital with an emergency department in the city.
Ramadan-Jradi said there are other hospitals and clinics in the Salem area that are covered by Regence. If a member needs to use Salem Hospital for an emergency, Regence will cover their care under the federal No Surprises Act that protects consumers from unexpected medical bills, he said.
