Blue Shield, Sutter Health sign new contract

Blue Shield of California and Sacramento-based Sutter Health announced today they signed a new two-year agreement giving covered patients access to Sutter Health hospitals and medical groups.

The contract takes effect Sunday and runs until Dec. 31, 2016. The previous contract expired Dec. 31, causing affected Blue Shield members to fear they may be assigned to other doctors.

Those covered by Blue Shield HMO and PPO plans will have in-network access to Sutter Health facilities in the Northern San Joaquin Valley, including Memorial Medical Center of Modesto, Sutter Gould Medical Foundation clinics, Sutter Tracy Community Hospital and Memorial Hospital Los Banos.

Blue Shield had charged that Sutter steadily raised its rates in the past decade by controlling health care markets in Northern California. Sutter countered that Blue Shield had proposed a sharp decrease in reimbursements that would have limited the nonprofit health system’s ability to meet medical needs of patients.

Specific terms of the new agreement are confidential, Blue Shield said. “I can say we negotiated for rates that provide our members with affordable health care,” said Steve Shivinsky, a Blue Shield spokesman.

In a news release, Blue Shield apologized that “the negotiation took longer than expected and that customers and members experienced uncertainty and disruption.”

The statement added, “The principles Blue Shield fought for in this negotiation with Sutter have been preserved.”

Sutter said the contract ensures patient access to its doctors and care centers as promised in Blue Shield health plans sold to consumers recently, including plans on the Covered California health exchange.

Sutter Chief Medical Officer Steve Lockhart said the new contract terms are “extremely close” to an offer Sutter made to Blue Shield several months ago. “We sincerely regret the frustration our patients experienced as the negotiations took longer than necessary,” Lockhart said. “We take seriously our role in helping control rising health care costs, and the contract reached with Blue Shield reflects our significant progress.”

Sutter said the pact contains the same language as in the previous agreement to resolve any disputes with the insurer through arbitration. Blue Shield had claimed Sutter proposed a dispute-resolution clause as a way to block lawsuits over anti-competitive business practices.

This story was originally published January 30, 2015 at 1:17 PM with the headline "Blue Shield, Sutter Health sign new contract."