Archived News

CEO answers concerns about Mission/BCBS contract

CEO answers concerns about Mission/BCBS contract

Mission Health Chief Executive Officer Dr. Ron Paulus took to social media last week to answer questions from patients regarding the health care system’s ongoing contract battle with Blue Cross Blue Shield of North Carolina.

Paulus spent an hour on Facebook live talking about the position he says BCBS put Mission in by not being willing to negotiate payment rates for patients. Mission notified BCBS in early July its intent to terminate its contract when it expires Oct. 5, 2017, but Paulus said he felt it was his only choice.

After six months of negotiating with Blue Cross, Paulus said it came down to Mission having to accept a new contract with a reduction in payments for the next three years or just let the current contract renew automatically Oct. 5 and accept a zero increase in payments for the next several years.

“Imagine never getting a pay increase at work while the costs of living continue to rise,” he said, adding that drug costs have increased 12 to 16 percent, medical supplies are up 8 percent and Mission gave employees a 3 to 4 percent raise last year.

“That only left us with one choice — to say to them we don’t want to leave your network, but we can’t live with zero or below — and we gave them a deadline to negotiate,” Paulus said. “They literally won’t speak to us about a contract until Oct. 5 or later — it’s a quote ‘corporate policy.’ They say it’s a matter of policy and in my opinion it’s a matter of punishment — it’s not normal.”

Paulus equated BCBS’s lack of negotiating and its advertising campaign against Mission as a bullying tactic. Knowing it has a 72 percent market share in the region, Paulus said BCBS is using intimidation to get Mission to renew its contract. For example, BCBS has already removed all Mission Health providers from its online directory, creating confusion for patients. Paulus assured people that BCBS members will still be in-network until midnight Oct. 4.

Related Items

“We all have trigger points and things that drive us — the thing for me my whole life is I don’t like bullies — I can’t stand people being picked on and I always sought to fight back,” Paulus said.

However, he said it was important for Mission to refrain from responding to BCBS’s attack ads in the newspapers and on the radio.

“This should be an issue of decorum between us and Blue Cross Blue Shield. We are incredibly focused stewards of our assets — our resources are incredibly restrained. We just can’t justify doing radio and newspaper ads,” Paulus said. “We’re just going to take those blows.”

Mission has in fact advertised in many of the newspapers covering Western North Carolina to address the BCBS contract. Back in July, Mission had full-page ads in newspapers that read, “Our Mission is to heal the sick, not arm wrestle insurance companies. Yet that’s exactly what Blue Cross is forcing us to do.” The ad also directs people to a website,

While Blue Cross ads have contended Mission’s costs are higher than other hospitals in the region, Paulus said Mission’s prices are 23 percent lower that similar hospitals in the state and 7 percent lower than other local hospitals. Truven Health Analytics/IBM Watson Health also recognized Mission Health as a “Top 15 Health Systems” for the last five of the last six years. Mission hasn’t made all this happen without sacrifice either — Paulus said Mission has cut $70 million in costs in the last year.

And if BCBS wants to point out Mission’s finances, Paulus said patients needed to examine the big insurance company’s bottom line. Just in one quarter of 2017, he said BCBS made $300 million — more than six times what Mission Health made all of last year. He added that BCBS had a 13.1 percent operating margin compared to Mission’s 2.5 percent margin over five years.

Paulus said he visited BCBS headquarters months ago in an effort to explain Mission’s challenges and successes. He understands that Mission needs BCBS and vice versa, but said communication is crucial to be able to come to an agreement. BCBS’s unwillingness to communication shows the insurer is unwilling to compromise.

Paulus used an orphanage as an analogy for how the health care system works — the federal government drops off 50 kids at the orphanage (Medicare patients) but only provides enough food to feed 90 percent of them; the state drops off 20 kids at the orphanage (Medicaid patients) and only pays enough to feed 80 percent of them; then five kids show up in the middle of the night with no money for food (uninsured patients).

Somehow Mission and other hospitals have to make up the difference and feed all the children. Paulus said the difference is usually made up through the remaining group of children — or the private, commercial insurance carriers.

“They give us extra food knowing we have the burden of supporting all the children,” Paulus said. “It’s nothing new — not unique to Mission — every hospital loses money on Medicare and Medicaid.”

Despite the challenges, Paulus said he was still hopeful the two parties would reach an agreement — even if the agreement comes after the Oct. 4 deadline when BCBS will discuss the contract again. In the meantime, he said different sets of patients would experience various impacts moving forward.

First and foremost, it’s important for patients to know that emergency room visits are always considered in-network whether BCBS and Mission have a contract or not.

Secondly, if you are a BCBS carrier in your second or third trimester of pregnancy, you can qualify to continue treatment in-network after the Oct. 4 deadline — the same goes for cancer patients and other specialized care.

There are also circumstances where BCBS may have to accept in-network costs for treatment at Mission affiliates if Mission is the only hospital that can provide the service in the region.

“They can’t create an undue burden on patients — if Mission is the only provider of that service in the region, they must by law provide payment for those patients with similar payment reimbursements,” Paulus said.

The remaining group of Blue Cross patients not covered in these scenarios will still be able to access Mission services after Oct. 4 but will have to pay higher costs because the hospital will be out-of-network.

Paulus couldn’t tell patients how much more they might have to pay for out-of-network services at Mission because Blue Cross won’t provide that information.

During this transition, Paulus said Mission staff would work closely with patients to help them get the best care possible whether it’s through Mission or another health care system.

“I apologize for you being in this situation — I’ve tried everything I can,” Paulus said in closing. “Although I’m asking you to stand with Mission, Mission stands for you — we’re here for you, we’re fighting for you. I’m doing this because if we accept that below zero or forever zero option, we can’t take care of you.”

If you are a BCBS patient and have questions about services through Mission, call the helpline at 828.417.0480.

Smokey Mountain News Logo
Go to top
Payment Information


At our inception 20 years ago, we chose to be different. Unlike other news organizations, we made the decision to provide in-depth, regional reporting free to anyone who wanted access to it. We don’t plan to change that model. Support from our readers will help us maintain and strengthen the editorial independence that is crucial to our mission to help make Western North Carolina a better place to call home. If you are able, please support The Smoky Mountain News.

The Smoky Mountain News is a wholly private corporation. Reader contributions support the journalistic mission of SMN to remain independent. Your support of SMN does not constitute a charitable donation. If you have a question about contributing to SMN, please contact us.