Anne Arundel Medical Center and CareFirst have reached an agreement in their public dispute over reimbursement rates.
The hospital and the insurer will sign a new three-year contract effective Sept. 1. There will be no disruption in care.
“We are confident that our new agreement allows us to continue to provide high-quality, low-cost care for our community,” said Victoria Bayless, president and CEO of Anne Arundel Medical Center, in a statement. “Reaching a fair resolution before any disruption in care was our goal. It reflects the commitment of both organizations to the people we serve.”
Chet Burrell, president and CEO of CareFirst, said in a statement, “We always seek to provide CareFirst members with broad access to the health care providers in the communities in which they live and work. We are pleased that our members will continue to have access to AAMC and its providers.”
The three-year contract will be the second three-year contract between the hospital and the insurer in the last two years.
While the two entities have made up now, last month they were publicly feuding over a CareFirst proposal to reduce some fees.
Anne Arundel Medical Center said last month that it would terminate its contract with CareFirst if the insurer did not increase its rates. That contract had been negotiated in the spring of 2016.
CareFirst, which pays about $200 million to the medical center and its related entities, had sought to reduce fees associated with radiology procedures. The insurer accused Anne Arundel Medical of demanding excessive reimbursement rates.
Anne Arundel made the opposite case, that CareFirst had dropped its rates too low.
“The rates we received from CareFirst were unsustainable and we were forced to initiate this process,” Dr. Mitchell Schwartz, chief medical officer for the hospital, said last month.
The requested changes would have amounted to as much as $13 million in increased annual costs for CareFirst members, according to Burrell.
He called the proposed rate changes typical and issued an open letter making CareFirst’s case after Anne Arundel publicly declared its intention to terminate the contract.
“It’s unusual in two respects,” Burrell said at the time. “One is that they sought to terminate (the contract) and that they did so in the middle of a contract period. Often times what happens is negotiations get pretty intense when contracts renew and then they renew when you work it out.”
But Bayless called the proposal untenable.
“There’s a point at which rates are too low and untenable for our system,” she said last month. “We have to be paid reasonable rates to provide the care that we do. We want to resolve this. We want to get to reasonable terms.”
Termination would have made the medical center and its affiliates an out-of-network provider for CareFirst members. Patients at Anne Arundel Medical Center, Anne Arundel Medical Group, Anne Arundel Diagnostics Imaging, and Pathways would have been affected.