Providence and Blue Shield California, currently embroiled in a contractual spat over how much the insurance company covers patient care, have until June 1 to ink a new deal before the old contract expires.
The hospital system emailed its 110,000 patients earlier this week, warning that Blue Shield health insurance might flip to out of network with Providence hospitals, clinics and physicians.
“We are diligently working with Blue Shield to resolve this negotiation and that you can continue to see your Providence providers with no impact until June 1, 2024,” the email states.
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Providence is urging Blue Shield policyholders to “talk to your human resources department, insurance broker or Blue Shield directly … to express your concerns and to find a way to stay with your doctor and Providence should we not reach an agreement.”
Such disputes during contract negotiations are common, though typically the rows don’t spill this deeply into the public eye, said Cynthia Saunders, a former assistant professor of health care administration at California State University, Long Beach. In late March, Blue Shield urged customers to look beyond Providence facilities for care.
“If I had a chronic health care condition or was in the middle of some bad health situation that needed constant medical care, I would be terrified. I might even have to consider moving to a place that has better access to medical care,” Saunders said.
Providence issued an offer to Blue Shield four weeks ago and hasn’t heard back since, said Laureen Driscoll, chief executive of Providence’s south division. The previous contract was signed before the pandemic, and Providence has operated in the negative for years, Driscoll said, without providing numbers on the past fiscal year’s margins.
“Providence wants to be able to provide our caregivers and our physicians living wages. And in order to do that, we need to be able to get paid the cost of care to provide services to patients,” Driscoll said. “From our standpoint, we’ve been negotiating in good faith, seeking reasonable terms to help cover those costs as the rising cost of care.”
Even if the deadline passes without a new contract, Blue Shield must cover emergency care, even if Providence facilities are out of network.
Driscoll said Providence would also provide financial assistance to help pay for out-of-pocket medical expenses.
Jonna Constantine, a Blue Shield of California spokesperson, said Providence’s demands would increase healthcare costs for patients and scuttle her organization’s attempts at affordability.
“We are disappointed that Providence has been unwilling to reach such an agreement with Blue Shield. Instead, they are attempting to negotiate in the media and using misleading information in the process regarding patient access to treatment. Our members are at the forefront of all decisions made by Blue Shield and the health plan’s goal is not to limit members’ access to care and treatment,” Constantine said via email.
In March, several Providence-affiliated physician groups in Southern California wrote in a letter that Blue Shield “continues to deny or delay coverage for necessary patient care at an alarming rate, with denials increasing by almost $250 million from 2019 to 2023.” According to Providence, the Blue Shield denial rate is up by 11.7% in 2024.
“As physicians, we cannot accept that our patients are often being denied treatment for essential care, including medications, therapies and procedures,” the letter stated.
Constantine added that Providence overstates the claim denial rate, writing that “the small number of claims for payment that the health plan has declined is almost always due to Providence’s errors, including not seeking authorizations appropriately, submitting duplicate claims, needing to provide additional information for processing, and submitting claims to the inaccurate party for payment.”
Medical debt is the largest reason for bankruptcy in the United States. In 2022, 92.1% of Americans had health insurance.
Blue Shield of California, a nonprofit – as is Providence – caps its net income at 2%. McKinsey and Co. consultant firm estimated that by 2027, nationwide healthcare profit will reach $819 billion.
