Weeks into a tense contract dispute, Blue Shield of California has started notifying customers to be prepared to find healthcare providers outside of Sacramento-based Sutter Health System, according to a San Francisco Chronicle report.
The payer notified more than 139,000 customers last week and plans to alert another 140,500 later this month, according to the report. Depending on the type of plan they hold, some people would have to find new physicians and hospitals by April, whereas others have until the end of June.
The latest contract between Blue Shield and Sutter expired Dec. 31. Sutter officials say the disagreement is due to Blue Shield's proposal to lower payments for health services. Sutter Health spokesperson Bill Gleeson called them "substantial cuts in reimbursement that would have a devastating impact on Sutter Health's ability to meet our patients' needs."
Blue Shield of California President and CEO Paul Markovich said the insurer cannot continue paying at its current level and increasing reimbursement. Blue Shield has said Sutter charges 18 to 30 percent more for its services than other providers.
Both parties claim to be reasonable in the dispute, according to the report. Blue Cross had $171 million in profits on revenue of $10.5 billion in 2013, whereas nonprofit, 23-hospital Sutter saw $300 million in profits on operating revenue of $9.6 billion that same year.
Mr. Markovich also pointed to one specific item to which he has taken issue. He told the Chronicle that Sutter wants a mandatory arbitration clause in the contact, which would prevent Blue Shield and other self-insured companies from suing in open court.
In the report, Blue Shield customers and Sutter patients expressed annoyance and frustration with the impasse. "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," one patient said in the report.