Deal Runs Through April 2025; Rates Dispute Left One Million Californians in Limbo
By Jondi Gumz
On Aug. 16, a battle between two health care giants over costs that left a million Californians scrambling for doctors — many in Santa Cruz County — ended peacefully with a multi-year agreement.
The agreement is retroactive to July 15, 2021, and expires April 30, 2025, giving some peace of mind to people paying for an Anthem health plan to see Dignity Health doctors and get treatment at Dignity Health Dominican Hospital in Santa Cruz at lower “in network” rates.
Without an agreement, people paying premiums to Anthem would have had to pay higher “out of network” rates to keep seeing their doctor and access Dominican Hospital. Some had procedures cancelled; others put off doctor visits, a stressful (and not very healthy) situation for all involved.
Anthem blamed Dignity Health, releasing a statement that Dignity rates were “almost 30 percent more expensive than other health systems,” and that “giving in” would mean higher out-of-pocket costs and premiums.
Dignity Health disputed the claim by citing a RAND study focused on 2016 to 2018 found eight other hospital systems in California have higher rates than Dignity Health.
The RAND study reported inpatient and outpatient rates combined at Dominican Hospital were 409 percent of Medicare rates, Stanford, 363 percent, Sutter Coast Hospital, 427 percent, and Sharp Chula Vista Medical Center, 461 percent.
Dignity Health also posted that Anthem exceeded Wall Street expectations when its first-quarter profit was a record $1.7 billion.
It’s hard to tell if one side gave in because neither side provided details.
Anthem’s announcement mentioned “affordability” for consumers.
“While we understand this wasn’t easy for consumers, it was necessary for us to stand firm as part of our efforts to help slow the sharp rise in health care costs,” said John Pickett, Anthem’s regional vice president of provider solutions, in a post online. “We value our relationships with providers, which are important to creating choices for our consumers and fulfilling our mission of improving lives and communities. Our members remained our No.1 priority as we worked hard and in good faith to find common ground and reach an agreement with Dignity that helps protect affordability.”
In a statement, Dr. Robert Quinn, CEO of the Dignity Health Medical Foundation in Santa Cruz, called it “a win for our patients.”
In a statement posted at KeepDignity Health.org, Dignity said, “We know these negotiations were stressful for our patients, our medical staffs, the communities we serve, and our own team. We sincerely appreciate patients’ understanding during the negotiations.”
Dignity Health acknowledged “a brief out-of-network period,” noting “the new agreement is retroactive to July 15, the date the previous contract expired, and any care received since July 15 will be considered in-network. In anticipation of reaching an agreement, we held Anthem claims, so patients should not experience any impact on their bills.”
According to Dominican Hospital President Dr. Nanette Mickiewicz, “The Dominican Hospital team communicated regularly with patients and community members who were concerned about their coverage, and we submitted continuity of care paperwork to minimize any disruption in care.”
During the negotiations, Dominican Hospital’s emergency department “continued to care for patients,” she added.
Nonetheless, patients paying for the Anthem plan for their Dignity doctors were distraught.
One woman said her choices were to “abandon all of my doctors and history including our specialty care at UC San Francisco and move medical groups, wait it out and hope for the best, or change my insurance during open enrollment,” with Kaiser Permanente under consideration.
One had foot surgery cancelled.
One with heart problems put off seeing the cardiologist.
Another who had to change doctors five years ago due to a job change in the family said the prospect of changing again created “unneeded stress in already trying times.” She felt Dignity should get “decent rates to help them offset all of their losses” for caring for patients with COVID-19, and she too is “starting to look much harder” at Kaiser Permanente.
To view the RAND study, see www.rand.org/pubs/research_reports/RR4394.html