Blue Shield claims hospitals joined forces to drive higher rates

Email LinkedIn

Blue Shield of California is publicly calling out UCLA Medical Center for causing an impasse in contract negotiations. Since the insurer has voluntarily capped its profits at 2 percent, it has particular incentive to stand its ground in this latest round of payer-provider contract disputes.

The insurer says UCLA has banded together with other University of California (UC) hospitals in a "carefully orchestrated negotiating strategy" to help increase their bargaining leverage and get higher provider reimbursement rates, reports the Kaiser Health News Capsules blog.

"If successful, this tactic will give UCLA an overwhelming negotiating advantage, allowing it and the other four UC hospitals to drastically increase their charges and make care less affordable for our members," Paul Markovich, Blue Shield's chief operating officer, wrote in an open letter to the hospitals.

By working together to negotiate as a group, the UC hospitals are forcing Blue Shield to negotiate contracts with UC's statewide health system instead of the individual hospitals, which gives them more power to obtain higher reimbursement rates, the Los Angeles Times reports.

"Creating a virtual monopoly to get higher rates out of us is something we're not going to stand for," Blue Shield spokesman Steve Shivinsky told the San Francisco Business Times.

Plus, in boosting its bargaining power, UCLA is asking for unusual contract provisions, such as a six-month contract that would be followed by further negotiations with other UC hospitals, as well as "relentless rate increases," the Business Times notes.

To learn more:
- read Blue Shield's open letter
- read the San Francisco Business Times article
- see the Kaiser Health News Capsules blog post
- check out the Los Angeles Times article

Related Articles:
Blue Shield credits $167M to customers, limits profits

Is Blue Shield's refund good business or spin campaign?
Blue Shield of California must explain rate hikes
Blue Shield of California rescinds rate hike