UMass Memorial’s Negotiations with Blue Cross:
What’s Going On?
The short version:
1. UMass Memorial and Blue Cross are negotiating about how much Blue Cross will pay to UMass Memorial for our services next year.
2. Blue Cross has set a maximum increase of 3.6% for all hospitals even though they are raising premiums for their members by 11.9% at the same time.
3. UMass Memorial says 3.6% is too low because we are a safety net system that serves a high proportion of Medicaid patients, and our rates are already lower than some places like MGH.
4. If they don’t reach an agreement, patients insured by Blue Cross will not be covered for care sought at UMass Memorial Health.
5. Patients are very worried and confused.
6. UMass Memorial proposed a reasonable compromise that agrees to the 3.6% cap with additional funding for primary care.
7. SHARE supports UMass Memorial’s compromise and urges Blue Cross to agree to it.
8. (UMass Memorial is self-insured, meaning employees’ health insurance will continue to cover UMass Memorial providers, regardless of what happens with the negotiations with Blue Cross.)
Read on for a fuller explanation…
First, the Background:
The State of Health Care in Massachusetts
We all want high quality care to be available to everyone across Massachusetts, and we all want that care to be affordable. Unfortunately, the reality is far from that vision in our state.
Health care is expensive for patients: The cost of health care in Massachusetts is among the highest in the country, and that high cost prevents many patients from seeking the care they need. Access to primary care has never been worse. Wait times in emergency departments have never been longer, the number of patients who leave before being seen is up, and so is the number of patients boarding in ERs.
Hospitals are struggling: Ten hospitals in Massachusetts declared bankruptcy in 2024 alone. The average commercial insurance rates negotiated and paid to Massachusetts hospitals rank as the 5th lowest among the 50 US states, and physician rates are the 3rd lowest. And, according to the state’s Center for Health Information Analysis, the average health care system operating margin over the past 5 years is negative 1.7 percent.
Safety Net Hospitals Are Hit the Hardest
Medicaid rates and uninsured patients: UMass Memorial takes care of a very high proportion of Medicaid and Medicare patients. UMass Memorial’s hospitals are “DSHs” – disproportionate share hospitals. DSHs face severe financial challenges because the amount they get paid to care for Medicaid patients is less than what it costs to provide their care. To make matters worse, hospitals are supposed to get reimbursement from the state’s Health Safety Net fund when they care for uninsured patients, but it already has a large financial deficit that hospitals are responsible for covering.
Getting worse: Medicaid reimbursements and the number of uninsured patients will get worse when Medicaid cuts and updated eligibility requirements in the federal One Big Beautiful Bill (OBBB) take effect in 2027. UMass Memorial Health is expected to lose $100 million in Medicaid funding annually. Safety net hospitals will find it harder to provide essential services, and patients will find it even harder to afford and access the care they need.
The solution: To ensure that all patients have access to high-quality, lifesaving care regardless of their demographics and insurance status, efforts must be made to level the playing field between safety net hospitals and other hospitals.
The Current Situation: UMass Memorial and Blue Cross are negotiating
Blue Cross Blue Shield of Massachusetts is negotiating with UMMH about how much Blue Cross will pay UMass Memorial providers for care we provide next year. If they do not come to an agreement by December 31, Blue Cross will not reimburse its members for care they get at UMass Memorial. Many patients would need to go elsewhere for their care.
The Problematic “Benchmark” for Rate Increases
The state’s Health Policy Commission set a cost growth benchmark of 3.6% for the health care industry. Insurers, including Blue Cross Blue Shield of Massachusetts, are using that benchmark to say they cannot increase hospital reimbursement rates more than 3.6% this year.
The benchmark rate increase does not work for safety net hospitals. This one-size-fits-all approach does not take into account the critical differences between DSH and non-DSH providers. Holding DSH providers to the same reimbursement ceiling as providers with a large share of commercially insured patients would create unfair economic conditions, forcing safety net hospitals further into financial instability.
The insurers are protecting their profits rather than acting in the best interest of patients. Insurance companies can build a financial margin into their premium increases, unlike hospitals. Blue Cross Blue Shield of MA plans to raise health care premiums for members by 11.9% in 2026.
Our patients’ health and wellbeing are at risk. The proposed cap to reimbursement increases would make it much harder to provide all the services that our patients need and deserve. Despite being proponents of health equity and high-quality care, payors taking this approach are actively undermining hospitals’ ability to ensure health care access to those most in need, exacerbating poor health outcomes among vulnerable patient populations, particularly in Black and Brown communities.
UMass Memorial Proposes a Compromise
Blue Cross has negotiated itself into a corner, publicly announcing it will not agree to reimbursement rate increases over 3.6%. In order to come to a deal that allows patients with Blue Cross insurance to continue to get care from UMass Memorial providers, our system has proposed other ways that Blue Cross could help our system fulfill its mission.
Invest in Primary Care: Primary care is essential to the health and wellbeing of the communities we serve, but it is suffering from chronic underinvestment. Through preventative medicine and chronic disease management, health care providers can help patients stay healthy and prevent costly hospital stays. Investing in primary care has clear public health benefits and downstream financial benefits. By prioritizing treating patients early and in lower acuity care settings, our health care system can help prevent admissions to the most expensive, highest acuity care settings.
UMMH’s current proposal keeps to the low 3.6% reimbursement rate and asks BCBSMA to also:
Fund a portion of our internal quality rewards program for our primary care providers – which is essential to incentivizing high-value, exceptional clinical care for the patient communities we serve.
Correct their payment policies to pay our Nurse Practitioners and Physician Assistants 85% of our negotiated physician rate, which is the industry standard.
These measures would financially stabilize primary care and ensure that reimbursement rates appropriately meet industry standards.
SHARE’s Position
The SHARE Union supports UMass Memorial’s position that Blue Cross’s offer is not enough. It does not take into account the financial reality of our role as the safety net provider for Central Massachusetts. We support UMMH’s efforts to find a compromise that supports primary care and the system’s finances. We urge Blue Cross to agree to this compromise.