Providence has launched the first public salvo in a spat with Blue Shield of California over ongoing contract negotiations.
The health system said in a press release issued Monday that the two have been negotiating "for months" in hopes of reaching a new agreement, and, while the insurer sought an extension to continue talks, it did not budge from its position on terms.
According to Providence, the rates sought by the insurer aren't enough to "adequately support the wages of Providence nurses, doctors and employees." In addition, the provider alleges that Blue Shield continues to increase claims denials, with the rate up 11.7% so far this year.
Claims denials increased by nearly $250 million between 2019 and 2023, Providence said.
“This is not sustainable or acceptable for our patients or our caregivers,” says Laureen Driscoll, chief executive of Providence’s South division, which spans Northern and Southern California, in the press release. “Denials are adding unnecessary stress to the patients we serve and failing to reimburse our hospitals and providers for medical services already provided.”
In a statement to Fierce Healthcare, Blue Shield said that should the two fail to come to an agreement, the contract would be terminated June 1. The insurer said it received a termination notice from Providence in October and has been engaged in negotiations since then.
Blue Shield is not-for-profit and as such caps its net income at 2%. The rates Providence has requested would not allow the insurer to continue to offer affordable coverage to members and clients.
"Our priority is to help ensure our members continue to have uninterrupted access to care with a network provider in their community," Blue Shield said. "We will work with our customers, members, and network providers to timely and compliantly notify our members of any changes to their assigned physicians and hospitals."
"We are disappointed that Providence has been unable to reach an agreement with Blue Shield to continue our long-standing network relationship," the insurer added.
Providence also said that Blue Shield has increased accounts payable from 24.9% in 2019 to nearly 37% by 2023, which is driving delays in payments to cover services provided to patients. The health system said it "continues to negotiate in good faith" and must "stay strong" in defense of its front-line workers and patients.
“We’ve covered these rising costs at an operational loss for several years and we simply can’t continue to finance the cost of providing care all alone. We need a partner,” Driscoll said. “They must adjust their rates to compensate for the increased financial pressures on wages, pharmaceuticals and supply costs and the cost of advanced technology that helps improve patient outcomes."
The dispute is the latest payer-provider contract negotiation to go publicly south. Given the economic pressures on providers, they're pushing for more from insurers, and payers aren't always willing to play ball. Other similar conflicts making headlines of late include those between Mount Sinai and UnitedHealthcare as well as Bon Secours Mercy Health and Anthem Blue Cross.