St. Francis Hospitals, Anthem disagree over health insurance reimbursements

The St. Francis hospital system and
Anthem Blue Cross and Blue Shield of Indiana traded shots in letters to doctors, employers and patients even as they continued
talks behind closed doors.

The original demand of Sisters of St. Francis Health Services Inc. would have increased reimbursement amounts $80 million
over three years, Rick Rhodes, an Anthem regional vice president, wrote in an Oct. 30 letter to employers covered by Anthem.
The increase would mean $12 million more in out-of-pocket costs to Anthem customers.

"Such an increase is not consistent with the market and would negatively impact health costs for Indiana employers and
health
care consumers," according to a document locally based Anthem distributed with the letter. "Their increase is unprecedented,
especially in this challenging economic climate."

But St. Francis claims its request for an increase only brings it in line with what other hospitals are getting.

"This proposal is consistent with Anthem reimbursement levels paid to competing hospital systems," Terry Wilson,
CEO of two
St. Francis hospitals in Lafayette, wrote in an Oct. 23 letter addressed to "valued partners." He challenged Anthem
by saying,
"We continue to welcome Anthem, Anthem brokers or Anthem employer groups to provide information to the contrary."

Wilson added that St. Francis has agreed to fix inpatient pricing and rate increases tied to quality ratings, something Anthem
has been pushing for in all its new contracts with health care providers.

The original contract was scheduled to expire in 2009, but St. Francis said Oct. 13 that it would cancel on Nov. 2. The parties
extended that deadline until Nov. 7, which fell after IBJ’s deadline.

The St. Francis system is based in the northern Indiana town of Mishawaka and operates three hospitals in the Indianapolis
area.

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