Sutter Health, Blue Shield Reach Two-Year Contract

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UC employees were not warned they could potentially lose their doctor after signing up for open enrollment under UC Care in November 2014.

Though health provider Sutter Health and health insurer Blue Shield signed a new two-year contract within a month of the disagreement, the recent conflict over terms and reimbursement rates between the two parties left about 280,000 customers in limbo.

Customers were informed they would have a six-month transition period to locate an alternative provider.

“The struggle of the contract was obviously [Blue Shield and Sutter Health’s] problem, and they were putting out all kinds of propaganda,” said Ronnie Lipschutz, politics professor, politics department chair, College Eight provost and UC Santa Cruz Faculty Association chair.

UC employees under UC Care have access to Palo Alto Medical Foundation (PAMF) through Sutter Health. Without Sutter Health, the closest medical facility employees could have access to is in San Francisco.

UC Emeriti Association Chair and chemistry professor Roger Anderson said it is typical for health care contracts to be settled at the last minute, but this disagreement in particular was more extreme than usual.

“I have never seen an escalation in this particular case where they basically told everyone, ‘Look, this may very well end at the end of June,” Anderson said. “That was not good. It basically upset a lot of people particularly in campuses like Santa Cruz and other Northern California campuses, because suddenly there were no other options. They couldn’t go to the UC medical centers. It’s not close enough.”

Those under UC Care had no choice but to wait. The health provider allowed subscribers to use Sutter Health facilities from Jan. 1, 2015 to June 30, 2015 to give them time to find a new doctor. But the contract disagreement left subscribers unsure of whether they should replace their doctor or wait for the dispute to boil over. Economics professor Carlos Dobkin, who specializes in health economics, said his family was concerned about the future of their Sutter Health coverage.

“It struck me as a negotiating tactic and I didn’t think we’d actually lose the doctors,” Dobkin said. “That’s what I assured my wife, but it was still uncomfortable for everybody. I was a little surprised that the negotiations spilled over into the public sphere the way it did.”

Though the two parties have reached an agreement, the reasoning behind the disagreement and the final contract has not been disclosed to the public. Emails sent to subscribers and online press releases stated the two parties could not come to an agreement over rates.

“Blue Shield negotiates with providers with the goal of obtaining rates that help us keep health care coverage affordable,” according to a statement provided by Blue Shield. “While the specifics of the new contract are confidential, Blue Shield is pleased that our existing legal rights and those of our customers have been protected. The principles Blue Shield fought for in this negotiation with Sutter have been preserved.”

Sutter Health is a combination of several former companies, clinics and hospitals, recently acquiring Radiological Associates of Sacramento.

According to a statement released by Sutter Health, the contract agreed upon is intended to benefit the subscribers.

“We take seriously our role in helping control rising health care costs, and the contract we reached with Blue Shield reflects our significant progress,” the statement read.

Whether or not the month-long disagreement was a negotiating tactic or not is unclear. The final contract has been kept confidential.

“There’s a sense of relief the contract has been signed, but a great deal of suspicion that something is going to happen again,” politics professor Lipschutz said.

As a part of the faculty committee, Lipschutz helped put together a petition that received about 1,200 signatures from people at all UC campuses in Northern California.

Lecturers are allowed to unionize, but the same is not afforded to tenured faculty members. Lipschutz said he knew several UC employees who were angry with the university for allowing the disagreement to escalate, but they were not allowed to take action.

“We’re not allowed to strike,” Lipschutz said. “Faculty don’t have unions. On the other hand, faculty are the most influential body employed, we like to think. So there’s a sense in which we’re voiceless and powerless and we can express displeasure but we can’t do anything else.”

Dwaine Duckett, vice president of Human Resources for the UC Office of the President, penned a response to Lipschutz, expressing UCOP’s discontent with the situation. UCOP insisted it was unaware of the pending negotiation and held Blue Shield responsible for any impact on UC employees.

While some argue the UC administration could have prevented the situation from escalating, some are also left wondering how the UC administration could better handle future health care matters. Chemistry professor Anderson said the university needs to be more transparent with employees.

“Health care is an expensive proposition and I firmly believe the university is trying to deal with the costs and resources they have to pay for it,” Anderson said. “Whether they’re doing it in the best possible way is a really open question.”