Local residents who are insured by Blue Shield and rely on Palo Alto Medical Foundation (PAMF) for medical services may be in for a surprise this year.
Blue Shield has announced that it could not come to terms on a new contract with Sutter Health – PAMF’s parent company – by Dec. 31, according to a Santa Cruz Sentinel report last week.
Barring a change in negotiations, people insured by Blue Shield may need to switch doctors and will likely incur some additional out-of-pocket costs for services provided by PAMF and other Sutter Health affiliates, Blue Shield of California representative Lindy Wagner wrote in an email to the Town Crier.
“We are continuing our discussions with Sutter with the goal of negotiating a new contract that will allow us to provide our customers affordable access to Sutter providers under fair and reasonable terms,” Wagner noted. “In the meantime, Blue Shield has taken steps to ensure members will continue to have uninterrupted access to quality medical care, and we are working with our members, brokers and employer groups to ensure a smooth transition to alternate providers.”
Wagner said a transition period is in place for Blue Shield members. HMO members can continue receiving Sutter Health services through March 31. Those members, who will be notified of the change later this month, will be reassigned to a new health provider April 1.
EPO and PPO members will be able to receive in-network benefits for Sutter Health services during a six-month transition period (through June 30) – with a caveat.
“However, during this period, while members’ percentage cost-share will stay the same, Sutter’s charges will be higher and this will result in a higher out-of-pocket expense for the member,” Wagner noted. “If a new agreement is not reached before June 30, 2015, services received from Sutter after that date will be paid for at the out-of-network benefit level.”
Jill Antonides, PAMF’s director of communications and public affairs, echoed those sentiments. She told the Town Crier that Sutter Health wants to “reach a fair and reasonable contract and remain a part of Blue Shield network.” Antonides added that the change would affect 240,000 PPO and 57,000 HMO Blue Shield members who use Sutter Health services.
Pointing fingers
In her email, Wagner pointed the finger at Sutter Health for the negotiation stalemate. She noted that Sutter sought an arbitration provision in contract talks to “insulate them from any potential litigation.”
“Specifically, Sutter is insisting that Blue Shield agree to an expanded mandatory arbitration provision for the resolution of all disputes, which would block Blue Shield and our customers from suing Sutter for anticompetitive business practices in open court,” Wagner said.
An online frequently asked questions page on Sutter Health’s website, meanwhile, refutes claims by Blue Shield that the health-care provider and its affiliates are seeking increased rates as part of a new contract, among other provisions.
“Blue Shield is seeking significant rate reductions and business terms that Sutter Health cannot accept. It remains our strong preference to reach a fair and reasonable contract with Blue Shield and remain in the Blue Shield networks,” the company noted on its website.
Local impact
Jeff Fallick, managing principal at Digital Benefit Advisors in Los Altos, told the Town Crier that his office was recently notified of the change, adding that his business has since received several inquiries about the ongoing situation from local residents insured by Blue Shield.
Fallick, who stressed that he’s not taking sides in the matter, said the insurance giant’s late notice to both insurance brokers and clients is rare.
“It’s a big deal. … Usually carriers give us a little more notice, but I think they were playing negotiations close to the vest,” he said.
Fallick didn’t know how many local PAMF patients the change could affect but noted that patients – particularly those waiting for needed surgeries or other treatments – are paying the biggest price, given the uncertainty over out-of-pocket costs and other matters.
“The saddest part of that is the people who get caught in the middle are the patients … that’s the hardest part,” he said.
