Houston-based Memorial Hermann Health System is no longer in network with Blue Cross Blue Shield of Texas after the two sides could not agree to terms by an April 1 deadline.
The health system is now out-of-network with BCBSTX for Commercial and Blue Advantage Marketplace plans, the organization said in a statement. Memorial Hermann facilities and affiliated physicians are unable to accept any BCBSTX and out-of-state BCBS plans for patients accessing the local BCBSTX networks.
In August, Memorial Hermann said it began negotiating with BCBSTX for new hospital, ancillary, and physician network contracts, which impact the PPO/POS, HMO and Blue Advantage Marketplace networks.
In a statement, the health system accused the insurance company of making "unreasonable demands" while "dragging out negotiations to the last minute." By using these tactics, BCBSTX is forcing health systems to "accept reimbursement rates and contract language that ignore the financial realities facing health systems today, jeopardizing continuity of care and creating unnecessary anxiety for the patients and families who depend on us for their care," the health system said.
Memorial Hermann also alleges that BCBSTX has used similar tactics against other Texas health systems, including Ascension Seton, Christus, Covenant Health, Southwestern Health Resources, Baylor Scott and White and Hendricks Regional Health.
The health system includes 14 hospitals and hundreds of doctors' offices in the Houston area.
In a statement, Blue Cross Blue Shield of Texas said the two companies failed to reach an agreement after months of negotiations.
"We remain open to reaching an agreement with Memorial Hermann Health System that ensures that we can fairly and prudently cover the cost of care appropriately on behalf our members. We take any potential disruption in our network of providers very seriously and will make concentrated efforts to ensure our customers, members and their families have continuity of care if an agreement cannot be reached," a company spokesperson said.
According to Memorial Hermann, some Blue Cross Blue Shield patients may be eligible for its "continuity-of-care" program. According to the health provider, those who are "pregnant or being treated for a disability, acute condition, or life-threatening illness" could qualify. Those eligible for "continuity-of-care" would receive in-network rates.
Memorial Hermann said it is also still open to negotiating a new contract.
Financial pressures squeezing providers and insurers alike have laid the groundwork for high-profile contract negotiation breakdowns in recent years, as Editor Dave Muoio reports, such as those between UnitedHealthcare and Johns Hopkins or Mayo Clinic. There have also been instances in which the sides have been able to mend their relationships, as was the case when Providence returned to Aetna’s network for most of 2025 or Jefferson Health’s much shorter break with Cigna last March.