Keystone Mercy Health Plan Cancels Contract with Crozer-Keystone Health System Effective April 30

TO: Members of the Keystone Mercy Health Plan in Delaware County          

FROM: Hospitals and Doctors of the Crozer-Keystone Health System 

It is with great regret that we inform you that Keystone Mercy Health Plan has announced its plan to cancel its contract with the Crozer-Keystone Health System, and its member hospitals: Crozer-Chester Medical Center, Delaware County Memorial Hospital, Taylor Hospital, Springfield Hospital and Community Hospital, and our Physician Network effective April 30, unless CKHS accepts a drastic reduction in reimbursement rates. Negotiations between KMHP and CKHS, which began in the fall of 2009, appear to be at an impasse. 

KMHP is demanding CKHS agree to a $12 million reduction from our current reimbursement rates which, if accepted, would place a dangerous financial burden on the Health System. Even before taking into account the latest proposed reduction in rates, KMHP is paying CKHS less than the cost of the care provided to KMHP members.

Crozer-Keystone hospitals and doctors have cared for many of the Keystone Mercy members and their families for generations and the Health System is deeply committed to meet the health needs of members of our community. CKHS' current reimbursement rates from Keystone Mercy are the result of negotiations and mutual agreement between the parties over many years.  We are fully aware of the State's economic issues and its impact on Keystone Mercy Health Plan, but we cannot accept a contract that will cause us to suffer a significant and additional financial loss in order to provide care for Keystone Mercy's members. 

Over the last 15 months we have worked hard to assure the Health System's financial stability in this difficult economic climate. Crozer-Keystone has made significant reductions in expense through a reduction in force, freezing wages, suspending accrual to the defined benefit pension plan, changes in Crozer's benefit structure, and the addition of a two-tiered wage structure for Crozer's unionized service workers. These changes have been painful for our workforce and concessions were only obtained from our unionized workers through protracted negotiations and a work stoppage.  Crozer-Keystone also engaged Accenture, a national consulting firm to identify other areas where Crozer-Keystone could reduce cost. 

It would be unconscionable to jeopardize the hard fought financial stability of the Health System and our ability to continue to meet the needs of the broader community because of Keystone Mercy's need to deeply reduce what they spend on patient care.  

Aside from the financial issues, cancellation of the contract will result in the displacement of thousands of patients whose long-term relationships with Crozer-Keystone Health System and its physicians will have to end. Keystone Mercy members will face the additional burden in time and money of having to travel farther to obtain care.  

The proposed $12 million reduction to CKHS would be a 14 percent decrease in reimbursements from our current rates, at a time when the recession has increased the number of low-income people who qualify for Medicaid who we treat and the amount of uncompensated care that we are called on to provide. 

Crozer-Keystone cares for thousands of KMHP members. In 2009 alone, care provided by CKHS to KMHP members included more than 7000 admissions to our hospitals, 30,000 outpatient visits, the delivery of 1600 babies and more than 100,000 patient encounters with our physicians. 

Keystone Mercy Health Plan members are entitled to continue to seek emergency care in the Health System. Also, if pre-certified by KMHP as being in active treatment before the contract's cancellation, such as expectant mothers and others, members can continue to receive care from CKHS throughout their pregnancy and delivery or continuation of other treatment. 

We continue to try to find a solution to this very difficult problem that will not disrupt the relationship between patients and the doctors and hospitals that have cared for you for so long. Keystone Mercy Health Plan reports that they have stopped adding new medical assistance members to their plan. In order to keep an active Medicaid managed care provider in the market, we are negotiating with two new providers of health care insurance for low income individuals who are preparing to enter the Delaware County insurance market.