After their contract expired last Dec. 31, 2014, Blue Shield of California and Sutter Health network of doctors and hospitals have failed to agree on terms that will continue their partnership. Disputes have ensued but the two companies are a step closer to finding common ground as they respond to each other's proposals.
Sutter Health first announced that it had offered Blue Shield a proposal that would extend the current transition period to the end of the year, effectively locking in contract rates and terms provided in 2014. However, Blue Shield did not agree to this proposal.
"Few things are more important than the relationships patients have with their doctors, and our proposal gives patients time to consider alternative health plan options for 2016," said Stephen Lockhart, M.D., Ph.D., chief medical officer for Sutter Health.
He added that the network is surprised that Blue Shield did not accept their proposal, even though the health plan provider sold products during open-enrollment period last fall featuring Sutter Health doctors and hospitals and that it has collected rate increases of up to 23 percent from employers and members this year.
Blue Shield countered that Sutter Health's proposal was not an extension for their contract. Rather, it was a way for the network to increase charges whenever they want to. The health plan provider instead offered an actual extension in which the lapsed contract between the two companies would be extended until Dec. 31, 2016.
Should Sutter Health accept this proposal, contract terms from 2012 to 2014 will still be in effect, except for a few changes necessitated by laws and for limiting adjustments due to inflation.
"[What Sutter proposed] is in Sutter's best interest, not our members. We think our members and customers would appreciate a real agreement. By offering a two year contract extension, patients can feel secure and have the peace of mind knowing that their doctor will remain in network," said Juan Davila, executive vice president for Health Care Quality and Affordability for Blue Shield.
Both Blue Shield and Sutter Health are not-for-profit entities. Founded in 1939, Blue Shield has 3.4 million members and enjoys over $13 billion in revenues annually as it strove to offer high-quality healthcare at affordable prices. Sutter Health has the same goal, helping reduce healthcare costs by over $300 million in the last few years.
When their contract lapsed, Blue Shield notified nearly 139,000 of its members early in January that they would need to find new doctors if their current physician is part of the Sutter Health network.
