Sutter Health, Blue Shield dispute could leave thousands seeking new doctors

A dispute between Blue Shield of California and Sutter Health may leave thousands of people, including residents in Merced and Stanislaus counties, with having to find a new doctor sometime in the next few months.

Blue Shield announced Wednesday that it has not yet reached agreement with Sutter Health for a new contract. The most recent contract was terminated Dec. 31, 2014.

Blue Shield estimates that 140,500 HMO members will be affected by its split with Sutter Health.

Lindy Wagner, a spokeswoman for Blue Shield, said these members can expect to receive a letter in the mail later this month informing them of their transfer to a new medical group or physician.

Another 4,400 PPO members who have used a Sutter Health facility within the last year will also be receiving notifications.

Sutter Health, which runs 23 hospitals in Northern California, operates Memorial Hospital Los Banos and Memorial Medical Center in Modesto.

Bill Gleeson, a spokesman for Sutter Health, said a couple of dozen Merced County residents will be affected by the terminations. About 71 patients at Memorial Hospital Los Banos are connected to Blue Shield health maintenance organization plans, he said.

He estimates an additional 1,800 Blue Shield HMO members in Stanislaus County and about 2,500 HMO members in San Joaquin County will also be impacted.

Wagner said customers will not be immediately impacted. HMO members will be reassigned to a new provider group, effective April 1. Meanwhile, preferred provider organization members will get a six-month transition period, and may continue to access care from Sutter Health providers until June 30.

However, if an agreement is reached once customers have started switching doctors, they may request to be moved back to their original provider, she said.

The reasoning behind the contract dispute depends on who is asked.

According to Blue Shield, Sutter wants the new contract to include language that would protect it from lawsuits stemming from anti-competitive practices, or efforts to prevent competition in the market.

“They shouldn’t be able to protect themselves from ever being challenged in court,” Wagner said. “It’s against public interest; and we cannot ask ourselves or our clients to waive our legal rights.”

Sutter Health, on the other hand, said the problem is Blue Shield is demanding lower rates that would have a detrimental impact on the health system and its efforts to meet patient needs.

“It’s really about a very large health insurance company trying to cut back on the money it spends on patient care, and limiting patient access to doctors and hospitals,” Gleeson said.

According to Gleeson, Sutter has made reasonable offers to Blue Shield that include rate reductions, but the health plan company has instead decided to reassign thousands of patients.

Sutter Health also offered to provide services for both HMO and PPO members until the end of June, Gleeson added, but Blue Shield decided to move up the deadline for HMO members to the end of March.

As negotiations continue, Blue Shield is still hoping an agreement will be reached, Wagner said. “We are not walking away from the negotiating table; we’re just hoping for fair terms.”

This story was originally published January 8, 2015 at 9:07 PM with the headline "Sutter Health, Blue Shield dispute could leave thousands seeking new doctors."