An update on our negotiations with Methodist Le Bonheur Healthcare

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At BlueCross BlueShield of Tennessee, we have a responsibility to manage rapidly rising health care costs for you. As part of our focus on affordability, we have been renegotiating our contract with Methodist Le Bonheur Healthcare system. Their rates were significantly higher than our average rates for other facilities in the Memphis area – and in the case of Methodist Le Bonheur Children’s Hospital, the highest of any children’s hospital in the state by far.

Here is the latest regarding our ongoing negotiations with Methodist Le Bonheur Healthcare.

Methodist’s own data show they charge us more on commercial plans

BlueCross confirmed using publicly available data Methodist self-reported in the 2021 Joint Annual Reports that:

  • BlueCross members make up over 50% of the commercial insured volume at Le Bonheur Children’s Hospital, but we only get a 21% aggregate discount from their standard rates.
  • Other insurers’ members make up the minority of volume but receive almost a 41% discount.
  • Le Bonheur Children’s Hospital posted a 13.8% profit margin in 2021 while every other hospital in the state has struggled.

In other words, the majority of Methodist commercial insured patients are BlueCross members, yet Methodist accepts lower payments from BlueCross competitors for their adult and children’s hospitals, ultimately driving up the cost of care and coverage for those we serve.

We offered a separate contract for Le Bonheur Children’s Hospital and we haven’t proposed  rate cuts for TennCare

We recognize that access to Le Bonheur Children’s Hospital is important to many of our members. So, while we continue to negotiate with the larger system, we proposed a separate contract this week to keep Le Bonheur Children’s Hospital in-network for many of our plans. This offer represented only a modest decrease in rates spread over a three-year period, but Methodist still rejected it.

Through our subsidiary BlueCare Tennessee, we’ve been committed to serving TennCare members since the program’s inception, and we understand how important that coverage is to Tennessee families. 

In negotiating with the Methodist Le Bonheur Healthcare system, BlueCross did not propose a rate decrease for BlueCare plans. We only asked to update the contract language to avoid operational issues. Even so, Methodist hasn’t accepted an updated contract with these changes for BlueCare.

Methodist has long indicated they understand the unique and essential nature of the services Le Bonheur Children’s Hospital provides to the greater Memphis area, yet they quickly dismissed our latest effort to keep Le Bonheur Children’s Hospital in-network – a move which is in the best interest of Methodist patients who are BlueCross members and employer customers.

We’re here to help members access quality care – even if Methodist leaves our networks

We value the care that Methodist Le Bonheur Healthcare facilities provide, and we hope to reach an agreement. Our goal is to get better pricing on your behalf, ultimately lowering costs for customers and members.

Our members still have in-network access to care at Methodist and Le Bonheur through Dec. 31. And in an emergency, members should always go to the closest ER – even if it’s at a Methodist facility.

Should Methodist refuse to agree to fair market rates by Dec. 31 and leave our network, BlueCross members will continue to have access to quality health care from other Memphis area providers and through our preferred partnership with the Baptist Memorial Health Care system as well as Regional One Health and Saint Francis Hospital locations.

And for primary and urgent care needs, we have four Blue of Tennessee with Sanitas Medical Centers across the Memphis region in addition to Baptist’s multiple minor medical clinic locations as well as other contracted urgent care providers.

It is also important for members to know that physicians employed by Methodist aren’t affected by these negotiations; we’re only working on contracts for the facilities. So, primary care and other doctors will still be in-network for our members on Jan. 1, 2023.

We hope Methodist will join us to do what is right for BlueCross members in the Memphis community.

No matter what, we’re here to support our members impacted by this situation, and we’re ready to answer your questions. Help is available by calling the number on the back of your member ID. You can also stay up to date on the status of our negotiations and learn more here at