CHI St. Luke’s severs deal with Molina, its second break with an insurance carrier this week

Ilse Finamore

CHI St. Luke’s will end its contract with Molina Healthcare by Nov. 25, the hospital’s chief executive said Wednesday. © CHI St. Luke’s Health – The Woodlands Hospital / CHI St. Luke’s Health – The Woodlands Hospital The break between one of Houston’s largest hospital systems and a major insurance […]

CHI St. Luke’s will end its contract with Molina Healthcare by Nov. 25, the hospital’s chief executive said Wednesday.



a large body of water with a city in the background: The break between one of Houston’s largest hospital systems and a major insurance carrier comes just 10 days before the start of open enrollment on the Affordable Care Act marketplace exchange on Nov. 1.


© CHI St. Luke’s Health – The Woodlands Hospital / CHI St. Luke’s Health – The Woodlands Hospital

The break between one of Houston’s largest hospital systems and a major insurance carrier comes just 10 days before the start of open enrollment on the Affordable Care Act marketplace exchange on Nov. 1.


It’s the second time this week that the hospital system has detailed plans to leave the network of a major insurance carrier and comes just 10 days before the start of open enrollment on the Affordable Care Act marketplace exchange on Nov. 1.

Patients covered by Molina plans will no longer be able to use CHI St. Luke’s facilities at cheaper in-network prices if the insurer and hospital system don’t work out an agreement by Nov. 25, the day before Thanksgiving.

Molina did not immediately respond to a request for comment.

As the executives reviewed finances at the close of the hospital’s fiscal year in June, they found that two major carriers — Molina and Blue Cross Blue Shield of Texas — were paying CHI St. Luke’s less than their competitors for the same services, CEO Doug Lawson said.

“With the added pressure of the pandemic and the growing realization that their rates are significantly below others,” Lawson said, “we’re contacting payers to let them know we need help with rates, and to be compensated fairly for our work.”

It is not clear exactly how many plan members would be affected by the termination. Molina members, however, accounted for 1,043 hospitalizations and 10,735 outpatient visits and procedures at St. Luke’s and 15 affiliated hospitals.

Nearly 65,000 Blue Cross Blue Shield of Texas members would also lose in-network status at St. Luke’s and its affiliates starting Dec. 16, the insurer said earlier this week.

Shara McClure, Blue Cross Blue Shield of Texas’ senior vice president of Texas health care delivery, said that both sides have negotiated since June to avoid termination. CHI St. Luke’s has asked for “egregious” price increases that the insurance company would not agree to, she said.

“We have a lot of customers who don’t have the appetite for increased medical costs right now,” McClure said Monday.

Health care costs are up nationwide, and in Houston, major hospitals are charging more than double the rates for medical care and hospitalization compared to federal insurance such as Medicare, the program for the elderly and disabled, and Medicaid, the program for the poor.

RAND Corp., a Santa Monica-based think tank that compares health care pricing, found that CHI St. Luke’s charges about 188 percent of the Medicare reimbursement costs for inpatient care. Lawson said the data is “flawed” and based on a very small sample of the patients the system treats each year.

Hospitals have claimed that the sudden drop in patient visits in the spring from the pandemic have lowered revenues.

CHI St. Luke’s reported an operating loss of $200 million for fiscal year 2020, Lawson said. Better reimbursement rates from Molina and Blue Cross Blue Shield of Texas wouldn’t have offset all those losses, but may have helped.

“It would allow us to have a much clearer line of sight on our recovery path,” Lawson said.

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