Blue Shield, Sutter Contract Expiration Could Affect 280K Patients
Blue Shield of California is informing hundreds of thousands of its health plan members that they could lose coverage with Sutter Health providers after a dispute over contract renewal terms prevented the insurer and health system from reaching a new deal, the Los Angeles Times reports. The contract expired Dec. 31, 2014.
Details of Contract Dispute
Blue Shield has expressed concern that Sutter's services are up to 30% more expensive than other hospitals. Blue Shield alleged that Sutter is seeking mandatory arbitration for all disputes, a policy that would prevent the insurer and employers from suing the health system in open court for anti-competitive practices.
Blue Shield spokesperson Steve Shivinsky said, "Sutter has a long history of driving up the cost of health care," adding, "Now they are seeking new contract terms that would insulate them from any potential litigation" (Terhune, Los Angeles Times, 1/5).
Sutter said that arbitration of antitrust claims is a common practice that has been approved by the Supreme Court (Rauber, "Bay Area BizTalk," San Francisco Business Times, 1/5). Sutter also said that that Blue Shield's contract demands would harm patient care and cited state data that show its prices are in line with or below those of other hospitals.
Sutter spokesperson Bill Gleeson said, "Blue Shield is demanding significant rate rollbacks, as well as several changes to language that has been in our contracts for years," adding, "Rate rollbacks of the magnitude that Blue Shield demands would have a negative impact on the level of health care services we offer."
Effect of Contract Expiration
Blue Shield is notifying about 280,000 policyholders that they could lose coverage with Sutter providers because of the expired contract (Los Angeles Times, 1/5). Specifically, the contract expiration could affect:
- Nearly 145,000 policyholders who receive coverage through their employers; and
- About 140,000 additional policyholders who live within 15 miles of a Sutter facility (Robertson, Sacramento Business Journal, 1/5).
However, patients will not be affected immediately. According to the Times, Blue Shield and Sutter have agreed to a six-month transition period for individuals with preferred provider organization plans.
Meanwhile, health maintenance organization members who have been assigned to a Sutter primary care physician will be reassigned to a new provider group by April 1 (Los Angeles Times, 1/5).
If a new contract is not reached by June 30, Blue Shield will pay out-of-network rates for claims at Sutter providers, according to the Sacramento Business Journal (Sacramento Business Journal, 1/5).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.