Providence Health settles dispute over rates with Premera Blue Cross

A high-dollar rate dispute between Premera Blue Cross and the owner of Sacred Heart Medical Center has been settled.

Neither side disclosed the comprise.

The problems threatened to sever a long financial relationship and leave patients with a series of tough choices about where to go for care and how to pay for it.

Sacred Heart’s parent company, Seattle-based Providence Health and Services, filed a termination letter with Premera two months ago. Premera is the region’s largest private health insurer.

The two sides – each earning millions in profits and flush with reserves – were at odds over how much money Premera should pay Providence for patient care.

Sacred Heart is the region’s largest hospital and plans to begin a $175 million expansion next year.

Providence also owns Holy Family Hospital and several other regional hospitals and care facilities. Though federal programs such as Medicare and Medicaid account for much of the hospitals’ revenue, the relatively low reimbursement rates from the government along with millions written off for charity care and bad debts generally leave hospitals looking for greater margins from private payers such as Premera.

Premera’s largest insurance customers will pay, on average, between 7 percent and 9 percent more next year.