BLUE CROSS: Contract Cancellations May Signal Bumpy Road Ahead
"It appears that a hospital mutiny is occurring, aimed at health insurance giant Blue Cross of California," the Sacramento Business Journal reports. The revolt "has been years in the making as hospital systems gathered enough clout to stand up to the low reimbursement rates of the managed care era." First, Sutter Health cancelled its contract with Blue Cross because it said rates were too low. Then, Mercy Healthcare "warned that it will dump $40 million worth of business with Blue Cross if the insurer doesn't come up with better payment rates." Next, University of California-Davis Health System "will begin negotiating rates with Blue Cross in several weeks."
The Future Of Things To Come
The Sacramento Business Journal reports that analysts say "this could signal the beginning of a medical industry backlash against low payments from health plans." While hospital systems were once eager to get contracts no matter what the terms, they are now more worried about the bottom line and are willing to walk away from contracts that are not profitable. Blue Cross spokesperson Cynthia Coulter commented, "Is this a sign of the times? I hope not. I don't ever remember contract negotiations breaking down like this." Butch Enkoji, executive director of the Sacramento-Sierra Hospital Conference, said, "I have heard this is more than Sutter. There had been talk that the next round of renewals with Blue Cross would include a close look at the financing to see if it's still feasible." He added, "Sutter just fired the first shot. What happens at Sutter will affect Mercy and trickle down to the smaller hospitals." However, "Coulter noted that [Blue Cross] has closed deals with other health care systems in recent months, including Roseville-based Adventist Health System Inc. and Tenet Healthcare Corp. in Santa Barbara" (Robertson, 5/25 issue).