The state's third-largest health plan, Blue Shield of California, will no longer send patients to UCLA Medical Center, one of the nation's top-ranked facilities, because the hospital wants too much money for its services, the insurer said Wednesday.
The hospital, with campuses in Westwood and Santa Monica and more than 1,000 beds, has been part of Blue Shield of California's network for two decades. But months of negotiations about payment broke down Tuesday, both sides said.
The split underscores the growing financial pressures faced by both insurers and care providers as healthcare costs rise.
Hospital services represent about a third of healthcare costs, the largest portion, but operators say they face unique financial hurdles as well, like uncompensated care for the uninsured. Insurers say they need to find ways to keep premiums down.
UCLA's "demands were well in excess of what comparable facilities have been receiving," said Tom Epstein, a spokesman for the nonprofit Blue Shield.
The hospital said it was simply seeking fair compensation for the quality of treatment it provides. "Blue Shield has been unable to provide UCLA with an offer that adequately reimburses ... for the high-quality, complex care that is provided to its members," said hospital spokeswoman Roxanne Yamaguchi Moster.
The hospital was recently ranked fifth-best in the nation by U.S. News & World Report magazine and still contracts with other insurers, such as Blue Cross of California, Aetna and Cigna.
About 4,000 of Blue Shield's managed-care plan members will have to seek treatment at other facilities, including Childrens Hospital Los Angeles and St. Vincent's Medical Center in Los Angeles, Epstein said.
Those in preferred provider organization plans will pay higher out-of-pocket costs if they go to the UCLA hospitals, except in cases of emergency.
Those with scheduled surgeries or already receiving treatment for serious ailments will not be affected, Epstein said.
Blue Shield has nearly 500,000 members in Los Angeles County and 3.3 million in the state.