Dive Brief:
- Following weeks of deadlocked contract discussions, Blue Shield of California has started notifying customers that they should be prepared to switch to healthcare providers outside of the Sutter Health System.
- The company contacted more than 139,000 customers last week, and is set to contact an additional 140,500 customer later in the month. Depending on their plans, some of these customers may have to find new care providers and hospitals by April, while other customers can wait until late June.
- Aside from their dispute over reimbursement rates, the industry giants are reportedly in disagreement over Sutter's request for a mandatory arbitration clause in the new contract. This clause would prevent Blue Shield and other self-insured companies from suing Sutter in open court.
Dive Insight:
With two industry giants at war, the stakes are high on both sides—and high for their consumers as well, many of whom stand to lose coverage for their primary physicians and hospitals just after signing up for their 2015 plans.
While Sutter argues that Blue Shield "continues to demand substantial cuts in reimbursements that would have a devastating impact on Sutter Health's ability to meet our patients' needs," Blue Shield says Sutter charges 18% to 30% more than other providers for its services. "We can't keep paying at that level and increasing that amount,” Paul Markovich, Blue Shield's president and chief executive, told the San Francisco Chronicle.
The problem is that no matter who "wins" in this scenario, both sides are sure to lose in some sense as well, as patients get caught in the middle. As one patient told the Chronicle, "Next open season, if there's no change here and I can't go to Summit without paying a premium, Kaiser's looking pretty good."