Blue Shield of California has been delaying and denying coverage “at an alarming rate,” impacting patient care and resulting in “Providence not being paid for care provided,” reported the health care system.
In addition, after months of contract negotiations between Providence and Blue Shield in pursuit of a new agreement, Blue Shield requested an extension. The current contract expires May 31.
The insurer is expected to notify over 110,000 Providence patients with Blue Shield that they will lose in-network coverage to Providence facilities and doctors starting June 1 pending a new agreement, said Providence officials.
“This is not sustainable or acceptable for our patients or our caregivers,” said Laureen Driscoll, RN, chief executive of the California Division of Providence.
So far in 2024, Blue Shield denials have gone up 11.7% compared to last year, noted Driscoll, adding that patients are being increasingly denied essential therapies, procedures and medications. Overall, denials have increased by almost $250 million between 2019 and 2023.
“Denials are adding unnecessary stress to the patients we serve and failing to reimburse our hospitals and providers for medical services already provided,” said Driscoll, adding that the coverage denials have impacted all three Providence hospitals in the San Fernando Valley: Providence Holy Cross in Mission Hills, Providence Saint Joseph in Burbank and Providence Cedars-Sinai in Tarzana.
Claim denials by health insurance companies have been on the rise nationwide in recent years, and hospitals and health systems are spending nearly $20 billion per year to fight denied claims, according to a recent report by Premier, a healthcare solutions company.
Providence also reported that their accounts receivable from Blue Shield increased from 24.9% in 2019 to nearly 37% in 2023, leading to delayed reimbursement payments to the health care system. Driscoll said Providence relies on adequate and timely reimbursements to pay its employees and cover the rising costs of pharmaceuticals and supplies, which have increased 19% between 2020 and 2022.
“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,” she said. “They must adjust their rates to compensate for the increased financial pressures on wages, pharmaceuticals and supply costs.”
Blue Shield Proposal a “Barrier to Care”
Blue Shield’s current contract proposal “falls far short of what is needed,” reported Providence.
“The proposed renewal rates you are offering in negotiations with Providence are below current market standards and are therefore a barrier to providing high-quality care that our patients expect and deserve,” stated a letter to Blue Shield of California on behalf of the presidents of 10 Providence physician groups from across the state regarding the agreement negotiations.
“The refusal by Blue Shield to provide what is fair and appropriate to adequately support the wages and benefits of our physicians and other caregivers is deeply concerning,” the statement continued. “Failure to offer a reasonable proposal will result in care being disrupted.”
The San Fernando Valley Sun reached out to Blue Shield of California seeking comment and was unable to communicate with them by press time.
Providence is encouraging its patients who have been affected by coverage delays and denials to contact Blue Shield directly by calling 1-800-393-6130.