Sutter, Blue Shield end contract dispute

Sutter Health and Blue Shield of California announced an agreement Friday on a new two-year contract, preserving Blue Shield members’ access to Sutter doctors and hospitals.|

Ending a monthlong showdown that left thousands of health plan members in Sonoma County wondering whether they would have to switch doctors, health care giants Sutter Health and Blue Shield of California announced an agreement Friday on a new two-year contract.

The agreement, effective Sunday, Feb. 1, ensures that Sutter hospitals and doctors will continue to be participating providers in the Blue Shield network. It applies to all Blue Shield patients treated at Sutter, including members insured by Blue Shield’s HMO, PPO and Covered California plans.

Both sides apologized to health plan members for the uncertainty and confusion caused by the protracted and strained negotiations, which erupted into public finger-pointing in early January.

“We absolutely feel very sincerely for our patients’ frustration,” said Karen Garner, a Sutter Health spokeswoman at the company’s corporate offices in Sacramento.

Steve Shivinsky, a Blue Shield spokesman, also apologized for the impasse and said, “The important thing is that we were able to reach an agreement.”

Had the two sides not been able to reach an agreement, thousands of Blue Shield members in Sonoma County and many more across the state would have been forced to either dump their Sutter-affiliated doctor or, if possible, switch to another health plan.

Local health insurance experts said such disagreements are not uncommon between large health plans like Blue Shield and large providers like Sutter.

There are about 1,300 local Blue Shield HMO members in the Sutter network, according to Sutter Pacific Medical Foundation North Division, a Sutter Health affiliate that contracts with Sonoma County doctors to provide medical care to health plan members.

The number of members with a PPO or EPO plan likely is even larger, according to Sutter, though an exact figure is difficult to calculate because it does not maintain a registry of PPO or EPO patients who are assigned to doctors.

Across the state, the split would have affected 270,000 Blue Shield members, including more than 140,500 HMO members.

Though the contract between Sutter and Blue Shield ended Jan. 1, a six-month transition period was built into the agreement to avoid disruption of medical services while both sides continued negotiations.

Those with a Blue Shield HMO could continue to see their Sutter doctors at in-network rates until March 31. After that, members would have been assigned to a new provider effective April 1.

Those with PPO member plans, including individual plans obtained through Covered California, were allowed to see their Sutter doctors as usual until June 30.

Sutter said that now, with the two-year agreement finalized, there will be no lapse in coverage for patients.

Neither Sutter nor Blue Shield would discuss the terms of the agreement, which are confidential. Blue Shield said earlier this month that the disagreement boiled down to economics.

“The final agreement is extremely close to the reasonable offer we made Blue Shield several months ago,” Garner said. “We think the real winners here are patients, because it preserves their access to the doctors they know and trust.”

Shivinsky said he could not discuss the rates the two sides had agreed on, but that Blue Shield is “always trying to negotiate rates that will help keep health care affordable for our members.”

Earlier this month, Blue Shield accused Sutter of trying to inject language into the contract that would block Blue Shield or health plan customers from suing Sutter in court for anti-competitive business practices. But Sutter had said arbitration of disputes is standard practice in the health care industry and that the language already exists in the expired contract.

Shivinsky said the new contract would not include provisions that would prevent either Blue Shield or its health-insured customers from taking Sutter to court for anti-trust practices.

You can reach Staff Writer Martin Espinoza at 521-5213 or On Twitter @renofish.

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