Sutter Health Leaves Blue Cross Network
In a powerful sign that tensions between Blue Cross of California and the state’s doctors and hospitals remain unabated, the huge Sutter Health hospital and medical group chain in Northern California has dropped out of the health plan’s network.
Sacramento-based Sutter Health, which owns 26 hospitals and six large medical groups, let its contract with Blue Cross expire. It stopped accepting Blue Cross HMO patients Jan. 1, and will no longer offer discounts to members of the health plan’s preferred provider network as of Jan. 31. The move could force thousands of patients per year to either find new doctors and hospitals or pay extra for seeking “out of network” care.
This is not the first time that Blue Cross, a for-profit subsidiary of Thousand Oaks-based WellPoint Health Networks, has cut off or threatened to end its relationship with doctors and hospitals. Blue Cross members in Santa Monica have not been able to use St. John’s Hospital and Medical Center since last summer, when that facility dropped out of the health plan’s network, and patients at Catholic Healthcare West hospitals came within days of being forced to switch before a new contract was reached.
Two years ago, Sutter patients were notified that they would be switched to new providers--only to learn that the two sides had settled their differences at the last minute.
This time, the contract has been allowed to expire. Bill Gleason, spokesman for Sutter Health, said the chain told Blue Cross several months ago that unless fees for hospital stays were increased and certain rules for analyzing claims changed, the health plan’s contract would not be renewed.
The cutoff affects not only the estimated 15,000 Blue Cross patients who go to Sutter hospitals every year, but also about 36,000 patients who receive care through Sutter-affiliated doctors. In addition, thousands more who once had the option of going to a Sutter hospital may no longer do so unless they are willing to pay for some or all of their care.
The contract dispute points up the dramatic change in the way Blue Cross, once considered a gold standard health plan, is viewed by doctors and hospitals. Since it became a for-profit entity, the company has earned a reputation as a tough negotiator, fighting to keep reimbursements in check and carefully analyzing claims.
This has earned its parent company high regard on Wall Street, but it has alienated doctors and hospitals, many of whom say they’d rather lose the health plan’s 2 million members in the state than accept low fees.
For its part, Blue Cross says its tactics and proposed rates are fair.
Spokesman Michael Chee said that despite harsh words during negotiations, the company has settled most of its disputes with health providers, terminating its relationship with only Sutter Health and St. John’s.
Chee said that Sutter’s demands calling for rate increases of up to 35% were unreasonable.
Under a transition plan, Blue Cross will continue to cover patients with certain conditions.
