Bill To Regulate Hospital Chain, Health Plan Contracts Could Limit Negotiating Power of Hospital Industry
A bill (SB 1509) under which hospital chains could not require health plans to contract with all of their hospitals could "substantially weaken the bargaining power" of the hospital industry in contract negotiations with health plans, the San Diego Union-Tribune reports (Berestein, San Diego Union-Tribune, 4/22). The bill, introduced Monday by Sen. Deidre Alpert (D-San Diego), also would require not-for-profit hospitals to submit financial audits to state regulators, provided that the Legislature passes a companion bill (SB 1262) sponsored by Sen. Byron Sher (D-San Jose) and supported by Attorney General Bill Lockyer (D) that would increase state regulation of charities. Alpert introduced SB 1262 at the request of CalPERS, in part because of a disagreement with Sutter Health about a proposal under consideration by CalPERS that would eliminate coverage for members at some Sutter hospitals. Sutter and CalPERS on April 8 signed an agreement that would allow CalPERS to eliminate coverage at some Sutter hospitals or maintain coverage for members at all Sutter hospitals at a discounted rate (California Healthline, 4/20). In addition, CalPERS in May will decide whether to eliminate coverage for members at as many as 41 hospitals that contract with Blue Shield of California . CalPERS spokesperson Chris McKinley said, "As we speak, we really don't have any leverage" in contract negotiations with the hospital industry, adding, "Members are paying more out of pocket. The state is paying more. These are unsustainable increases."
According to the Union-Tribune, as more hospitals in the state have consolidated over the past few years, the hospital industry has "gained leverage at the negotiating table with health plans." However, Jan Emerson, a spokesperson for the California Healthcare Association, called SB 1509 a "case of shooting the messenger" and said that factors such as nursing shortage and the cost of state seismic retrofit requirements have led to the "high costs that hospitals pass along to insurers," the Union-Tribune reports. "If you force hospitals to contract hospital by hospital, you are giving market leverage only to one side of the equation," Emerson said (San Diego Union-Tribune, 4/22). CHA has not taken an official position on the legislation. The Senate Insurance Committee and Senate Judiciary Committee held hearings on the legislation earlier this week (California Healthline, 4/20). The Senate Health and Human Services Committee will hold a hearing May 5. According to CalPERS, the bill is "a work in progress" and could include additional amendments, the Union-Tribune reports (San Diego Union-Tribune, 4/22).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.