Mississippi Governor Rescinds Executive Order Requiring Blue Cross of Mississippi to Grant “In Network” Status to Excluded Hospitals

more+
less-

In early November, Mississippi Governor Phil Bryant rescinded an Executive Order (Executive Order 1327), issued only weeks earlier, that would have compelled Blue Cross of Mississippi to continue to offer “in-network” status to several Mississippi hospitals with whom Blue Cross had terminated its relationship as a result of a contract dispute with them. Governor Bryant’s decision follows the initiation of a federal lawsuit by Blue Cross, claiming that Governor Bryant’s Executive Order compelling it to retain its “in-network” relationship with the hospitals violated its constitutional rights. Notably, however, Governor Bryant’s latest action does not put the network exclusion issue to rest, as the Mississippi Insurance Department will continue to investigate whether Blue Cross’s decision violates Mississippi law.

The dispute began last summer, when Blue Cross advised ten Mississippi hospitals (all owned by HMA) that it was modifying its reimbursements to the hospitals, claiming that they were overpaying for their services. The hospitals responded by filing a lawsuit against Blue Cross in state court (Jackson HMA, d/b/a Central Mississippi Hospital Center, et al. v. Blue Cross Blue Shield of Mississippi, Circuit Court of Hinds County, Mississippi) claiming that Blue Cross’s decision to modify their reimbursement rates was a breach of contract, causing them more than $10 million in damages. Blue Cross responded to the lawsuit by providing 30-days notice that it was terminating its contract with each hospital altogether, removing the hospitals from its network.

The hospitals sought the Governor’s assistance, claiming that Blue Cross’s decision to terminate the parties’ contracts would cause serious harm to Mississippi residents and that immediate relief was required to protect against that result. In response, Governor Bryant issued Executive Order 1327, in which he declared that “Blue Cross’s exclusion of the hospitals from the BCBS network of providers threatens patient access to care” and, on that basis, ordered Blue Cross to resume the relationship pending further investigation by the Mississippi Department of Insurance. Blue Cross responded by filing a federal lawsuit challenging Governor Bryant’s authority to issue the Executive Order.

Governor Bryant’s subsequent decision (embodied in Executive Order 1328) rescinds the portions of Executive Order 1327 that compel Blue Cross to continue “in-network” status to the hospitals pending further examination by the Insurance Department, and comes closely on the heels of a decision by U.S. District Court Judge Henry Wingate to grant a request by Blue Cross to temporarily block the Governor’s Executive Order from taking full effect. With a full hearing on Blue Cross’s motion set for November 5, and Blue Cross having agreed both to restore in-network status for four of the ten previously cancelled hospitals and to dismiss its lawsuit against the Governor, the Governor issued the modified Order.

As provided for in the new Executive Order, the Department of Insurance will continue its examination into whether Blue Cross’s decision to terminate its contracts with the six hospitals that remain “out-of-network” adversely impacts patient care in the state, and whether Blue Cross’s decision violates Mississippi law, which, among other things, requires an insurer to have a network sufficient to serve the needs of the public and also prohibits insurers from engaging in any “trade practice which is … an unfair or deceptive act or practice in the business of insurance.”

The Mississippi action is the latest – but likely not the last – dispute between health insurers and providers about network access. While some states have tried to resolve these difficult issues with legislation (some with “any willing provider” legislation limiting an insurer’s ability to refuse network admission to a provider in several states and, in Pennsylvania, with proposed legislation requiring certain providers to contract with “any willing insurer” being the most prominent examples), while other states have chosen to let market forces sort out such disputes, these issues remain difficult ones for both providers and insurers. As health care reform drives further efforts by both insurers and providers to reduce costs and become more efficient – a dynamic that limited networks has the potential to enhance, in some circumstances – these disputes are only likely to increase. Stay tuned.