ORANGE COUNTY: St. Joseph’s Scraps 12 HMOs
Officials at St. Joseph Health System, Orange County's largest medical provider, announced Saturday that they will "jettison" 12 patient health plans over the coming months, forcing as many as 150,000 patients to either change doctors or switch health plans, the Los Angeles Times reports. Citing $45 million in annual losses resulting from low HMO reimbursement rates, the health provider will renew contracts with only four of its current insurance providers -- Aetna U.S. Healthcare, Blue Shield of California, Blue Cross of California and Cigna Healthcare of California -- allowing contracts with the other 12 to "expire gradually" over the next year and a half. The four providers with renewed contracts will take responsibility for the costs of catastrophic care and new technology and medicine -- costs that the medical providers said were driving them "into the red." St. Joseph's CFO Joe Randolph said that fewer health plans will reduce the hospital's administrative costs. However, the hospital and physician group network is negotiating with a fifth plan, Health Net, which may join the group. St. Joseph's officials reported that patients with the four renewed HMOs "should not experience a change in their medical service," but those belonging to the other 12 HMOs "will likely face changes in their health care." PacifiCare of California, the county's largest HMO, was dropped from St. Joseph's, leaving 114,000 patients to decide between choosing another physician or another health plan. St. Joseph's will soon begin an "information blitz" aimed at informing patients about the changes and encouraging employers to offer coverage through the remaining four plans.
Put Up or Shut Up For HMOs
The St. Joseph's decision, which comes after "four months of intense negotiation," was "applauded" by James Lott, executive vice president of the Health Care Association of California, a trade organization of hospitals. "Health facilities are finally telling the HMOs, 'You need us more than we need you'," Lott said. Peter Warren, a spokesperson for the California Medical Association, added, "It's another example of health plans playing hardball with their rates and dislocating patients from their doctors." Other California medical providers that have ended contracts with low-paying HMOS include Sutter Health, Catholic Health Care West and Tenet Health Care Corp. (Morin, Los Angeles Times, 10/15).