PEORIA — Blue Cross and Blue Shield of Illinois is trading one Peoria hospital for another.

As of Jan. 1, the Blue Cross health-insurance network no longer will include most OSF HealthCare hospitals in Illinois, it was announced Tuesday. That includes OSF HealthCare Saint Francis Medical Center in Peoria, as well as facilities in Galesburg, Kewanee and Monmouth.

But, also beginning Jan. 1, UnityPoint Health-Methodist will become part of the Blue Cross network for the first time in 30 years. The two announcements were almost concurrent, followed by hastily arranged news conferences by officials of both hospitals.

While OSF HealthCare expressed disappointment and surprise at the termination, Dr. Keith Knepp, president of UnityPoint Health-Methodist and Proctor in Peoria, said his organization was pleased to partner with Blue Cross after years of conversations. 

"We've been expecting this for some time. We've been working on it, hoping for it," Knepp said at an afternoon news conference. "We didn't know when the timing would come about, but we're very pleased the timing is now." 

Other UnityPoint Health providers — including the physicians network and Proctor and Pekin hospitals — already were part of the Blue Cross network, according to Knepp. He said expanding in-network access to Methodist will make it easier for the system to provide a comprehensive array of services.

The change is the latest twist in the long-running competition between the area's two major health-care providers. 

In 2013, what then was Methodist Medical Center filed an ultimately unsuccessful lawsuit against OSF Healthcare System. Among other things, it charged OSF Saint Francis Medical Center routinely threatened to withdraw from the Blue Cross preferred-provider network if it contracted with Methodist. 

A federal appellate court ruled in OSF's favor in June. The court found no evidence of anti-trust violations.   

Insurers typically negotiate rates and price structures with health-care providers.

"We negotiated a rate with Blue Cross that we're satisfied with," Knepp said. "It appears St. Francis did not." 

Blue Cross initiated the OSF termination last week, according to Randy Billings, the Peoria-based organization's senior vice president for population health. It affected only three OSF hospitals: St. Francis, St. Mary Medical Center in Galesburg and Saint Anthony Medical Center in Rockford.

But with its major facilities no longer in the Blue Cross network, OSF believed it could not provide regional broad-based service — including referrals — from its other hospitals, according to Billings.

"We felt that they had backed us into a corner," he said during a late-morning news conference at Spalding Pastoral Center. "We were quite surprised by their termination of our facilities."

The insurance company didn't cite a reason for the move, according to Billings. But he said Blue Cross wanted to expand its regional network beyond OSF hospitals, which had offered the company preferred rates. OSF couldn't maintain those rates under those circumstances.

In a statement the Journal Star received Tuesday afternoon, Blue Cross confirmed Billings' account regarding network expansion.

"Our current PPO and BlueChoice contracts (with OSF) ... no longer serve BCBSIL's aim to continue to broaden our members' access to network providers and further enhance our network and product offerings," the insurance company stated. 

"Our mission is to continue to provide access to quality, cost-effective health care in Illinois. That includes creating and designing networks that balance access and affordability of care."

The Blue Cross termination includes that entity's insurance plans based in other states but applies only to OSF hospitals, Billings said. OSF non-hospital facilities, including physicians and cardiovascular and neurological institutes, are not affected.

OSF hospitals still will treat Blue Cross patients, but out-of-pocket expenses likely will be higher. Billings suggested the Blue Cross move also might affect the OSF bottom line.

"They're certainly the largest payer in the Illinois market, so it does impact quite a few people," Billings said. "We don't take this lightly. Our mission is to serve all people, especially the most disadvantaged.

"Hopefully, (Blue Cross) will see that we want to be in, and they will change their minds and let us into their network."

Representatives of both sides stated they're open to continuing contract discussions.

Other affected OSF hospitals include Saint Luke Medical Center in Kewanee and Holy Family Medical Center in Monmouth.

The OSF hospital in Alton, Saint Anthony's Medical Center, is to remain on the Blue Cross network, Billings said. He cited major health facilities in and around nearby St. Louis, where high-risk patients can be transferred easily. An OSF hospital in Escanaba, Mich., also is unaffected.

Nick Vlahos can be reached at or 686-3285. Follow him on Twitter @VlahosNick. Pam Adams can be reached at 686-3245 or Follow her on Twitter @padamspam.

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