Neither Side Can Cancel Norton-Anthem Contract Early

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The new three-year contract between Norton Healthcare and health insurer Anthem does not allow either side to cancel early — likely preventing a recurrence of the dispute that recently exposed thousands of area residents to higher costs. Although details of the new contract are confidential, Norton CEO Stephen A. Williams said in an interview Friday that Norton and Anthem agreed to disclose that feature because many people have asked whether the new contract could be terminated early without cause, as the old one was.

Norton used the old contract's early-exit provision to withdraw from Anthem's network on July 1, even though the contract wasn't scheduled to expire until October 2010.

The contract interruption lasted more than three months, ending Monday when the new agreement was announced. During that time, Anthem members had to pay higher out-of-network costs if they used Norton services, and many people reluctantly changed doctors or hospitals as a result.

Anthem spokeswoman Kim Ashley confirmed the new contract doesn't allow the parties to withdraw without cause.

The two organizations “have aligned in a manner that provides the assurance of long-term access to quality health care (and) predictable cost,” Ashley said in an e-mail. “We know that the past few months have been inconvenient and regret the difficulties.”

Chris Poynter, spokesman for Metro Mayor Jerry Abramson, said the mayor is “glad that the contract makes it … more difficult for either side to disrupt the lives of patients.”

House Speaker Pro Tem Larry Clark said he was happy the parties agreed to the new feature but will still seek passage of a bill he introduced to help patients caught in the middle of such contract disputes.

Clark's bill would strengthen protections for patients who are in the middle of a course of treatment when a contract ends and would require contracts between insurers and hospitals to run for at least three years.

Clark said it “sounds well and good” that the new contract doesn't allow Norton or Anthem to withdraw without cause — but he noted that “they had a previous agreement not to disrupt (service) but they did.”“I think to protect the 300,000 consumers, we've got to make sure we do it in statute,” he said.Norton, Louisville's largest health-care provider, notified Anthem in December that it planned to terminate the contract because of slow payments and problems resolving claims. Norton also asked for higher reimbursements.

Anthem acknowledged it can be difficult to deal with because it handles local claims for more than 30 Blue Cross plans based in other states, which have varying rules. But it said Norton was using that issue as a smoke screen to demand higher rates.

When the companies couldn't reach an agreement over the next six months, they severed relations.

The new contract runs through Oct. 18, 2012. Neither side can cancel unless it claims a breach of contract, Williams said.

Even if that happens, the dispute could be taken to court, where a judge could block a contract termination.

That's what happened last March in Indiana after Anthem announced it was terminating its contract with St. Francis Health Services, which operates hospitals in Indianapolis and elsewhere. It claimed St. Francis had broken the contract by billing hospital rates for physician services at outlying clinics.

But Marion Superior Court Judge Patrick L. McCarthy ordered Anthem to stay in the contract until at least Sept. 1, and the two companies eventually agreed on a new contract.

Norton would not say whether its contracts with other health insurers, such as Humana and UnitedHealthcare, allow parties to withdraw on six months' notice. Norton spokesman Steve Menaugh said confidentiality clauses forbid disclosing such details.

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