Hospitals and Health Insurance Costs: Lexington Medical Center and Blue Cross Blue Shield

The cost of health insuranceHere’s a look behind the curtain.
Health insurance prices are largely the result of negotiations between healthcare providers and insurance companies. When the two parties can agree on prices and fees for services, the provider becomes a part of the health insurance company’s network.
As you might expect, hospitals and insurance companies cannot always agree on prices.
Here’s a case in point. Blue Cross Blue Shield of South Carolina, the largest insurer in the state, and Lexington Medical Center, a large hospital network in suburban Columbia, have “broken up.” Lexington Medical Center will no longer be part of the Blue network effective March 1.
If you are on an individual health insurance plan that is Obamacare-compliant (i.e. you purchased coverage in 2014 or 2015), the change will have no impact because LMC was never included in the new EPO network those plans utilize.
If you have an older individual policy or are covered on a group health plan, this change will impact your network.
Blue Cross policyholders who have received care at LMC will be receiving communication from BCBS to explain what has happened and what their options are.
Here’s an excerpt from their explanation:

“LMC is demanding excessive fee increases that are much higher than fair market value, national medical inflation and the rates that other hospitals and doctors request. As LMC now employs more than half of the doctors who practice in Lexington County, its demand for higher fees will have a major impact on the community. In fact, we estimate that if we were to agree to the increase LMC has requested, it would add more than $40 million over the next two years to the cost of health care for people who use LMC facilities and doctors.

“Members.. can visit our website,, to find network providers. Members should click on the Preferred Blue Directory link under the Find a Doctor or Hospital header on the right side of page.”

It’s easy to make insurance companies look like villains. While we wouldn’t claim that insurance companies are always paragons of virtue, most people do not realize that high insurance costs are a direct result of the high costs of healthcare — especially from hospital systems (and prescription drugs).
The Affordable Care Act instituted rules that significantly limit the profit margins of health insurance companies, making it more clear that increased prices in healthcare directly lead to increased health insurance premiums for consumers.
If you’re a small employer who is impacted by this change, you’re welcome to contact us to see if there are other options.
These negotiations are often resolved. Today it was announced that BCBS and LMC have resolved their differences and that LMC will remain part of the “Preferred Blue” (i.e. the non-Obamacare) network.