October 26, 2004 > What Happened to the CalPERS Blue Shield Contract at Washington Hospital?
What Happened to the CalPERS Blue Shield Contract at Washington Hospital?
During the discussion about Measure FF, the question of the current status of the Blue Shield contract with Washington Hospital arose. The following is the response from Mike Wallace, Board President and Kimberly Hartz, Chief of Strategic Management, Washington Hospital.
Mr. Wallace commented, "We are working with CalPERS and having some positive conversations." He noted that the current issue arose because earlier this year CalPERS, just like any other business, was interested in reducing their costs of medical insurance. They designated Blue Shield to be their negotiating agent. When Washington Hospital was approached, an agreement was reached to reduce the CalPers rate to an acceptable level for both parties. Washington Hospital was willing to do this because there were relatively few CalPers members that use district services. The rate reduction would have some, but relatively minor, financial impact due to low Washington Hospital district usage.
After negotiating concessions for CalPERS, Blue Shield then decided that the CalPERS rate reduction should apply to all Blue Shield contracts with Washington Hospital. As a district-owned hospital, the Board of Directors needed to make sure that any agreements would not jeopardize the viability and financial health of the hospital. When the Blue Shield demand was rejected as unfeasible, Blue Shield removed the CalPERS agreement.
Blue Shield and Blue Cross patients continue to use the hospital without any interruption. CalPERS members that have elected Blue Cross are unaffected. It is important to note that while some states have medical insurance that combine Blue Cross and Blue Shield services, in California these entities are separate, each offering their own plans. The only parties impacted by this current disagreement have been CalPERS Blue Shield patients.
The CalPERS website says:
In our ongoing efforts to contain skyrocketing health care costs, CalPERS partnered with Blue Shield to develop the 2005 Blue Shield CalPERS Network. As a result, some hospitals now available to you will no longer be part of the Blue Shield/CalPERS provider network starting January 1, 2005.
While this was not an easy decision - many may feel the impact of this change on their current health coverage - the cost of continuing to include these hospitals in our Program is no longer a choice we can make at all. These hospitals represent the highest-cost providers in the network, which results in increased costs to everyone in the CalPERS Health Program.
Twenty-four hospitals have been removed from CalPERS Blue Shield and include many well-known institutions such as Eden Hospital Medical Center, Cedars Sinai Medical Center (Los Angeles), USC University (Los Angeles), California Pacific (San Francisco) and O'Connor Hospital (Santa Clara)
CalPERS is the acronym for the California Public Employees' Retirement System that provides retirement and health benefits to more than 1.4 million public employees, retirees, and their families and more than 2,500 employers.