California Regulators Rein In Blue Cross Confidentiality Rules
On Thursday, the Department of Managed Health Care issued a cease-and-desist order prohibiting Blue Cross of California from requiring providers to sign confidentiality agreements as part of contract negotiations, the Los Angeles Times reports.
Blue Cross has required physicians, hospitals and medical labs to sign confidentiality agreements to prevent them from publicly disclosing rate negotiations for their contracts.
Shannon Troughton -- spokesperson for WellPoint, parent company of Blue Cross -- said the agreements "provide protection of confidential information and [bar] consultants from sharing Blue Cross data with other providers and competitors." Troughton said Blue Cross has used such agreements since 2002.
According to providers, Blue Cross threatened to stop sending them patients if they did not sign the agreements. Providers also contend that the requirement prevented them from seeking outside representation during fee negotiations.
State regulators issued the order after several hospitals threatened to not renew their contracts with Blue Cross rather than negotiate new rates without professional representation.
If all of the contracts expired, almost 700,000 Blue Cross patients in California would be forced to find a new provider for scheduled surgeries and other elective treatments, according to state officials.
Cindy Ehnes, DMHC director, said there was "a tremendous concern about the financial viability of some of our smaller rural and stand-alone hospitals."
Francisco Silva, a legislative advocate for the California Medical Association, said the physicians' organization was "hoping for something broader" from state regulators. He added, "While it clearly indicates that the confidentiality agreement in the contracts was illegal, it did not go back and declare the existing contracts void" (Girion, Los Angeles Times, 11/1).