SUTTER: Negotiations With Blue Cross Break Down, Resume
"[L]ast-minute maneuvering" this month kept Sutter Health, California's second largest health care system, from canceling Blue Cross contracts affecting 8,000 to 9,000 of the insurer's members. But while both firms have returned to the bargaining table, no agreement has been set for reimbursements for members of Blue Cross' Prudent Buyer and CaliforniaCare health insurance plans. Sutter has "been threatening since October" to cancel several contracts with Blue Cross if the insurer does not increase its reimbursements. Negotiations on April 15 "reached a crisis stage," prompting Sutter to draft an announcement that the healthcare provider was "about to ax its contract with Blue Cross." Later that day, representatives from both companies resumed talks, which continued the following week, the Sacramento Business Journal reports.
Insurers and industry experts are watching the dispute closely. Berkeley healthcare analyst Peter Boland said if Sutter rejects Blue Cross, it "may be the first shot fired in the counter-reaction to health plan rates." He added, "It would certainly be the first turn-down of a contract this size and may be early warning that other health care provider systems with their act together will walk out on major contracts" that aren't favorable to them. However, other industry watchers expressed doubt that Sutter would walk away from such a large contract. "Hospital systems are starting to take a realistic view that some business is not good business," he added, "but politically and emotionally, it's still hard to turn anybody down" (Robertson, 4/27).