With Blue Shield refusing to cover the cost of care, more than 110,000 Californians will be out-of-network for Providence starting June 1

IRVINE, Calif. (April 1, 2024) – More than 110,000 Providence patients will be notified this week by Blue Cross of California they will lose in-network coverage to Providence hospitals, clinics and affiliated physicians starting June 1.

With its contract with Providence expiring May 31, Blue Shield is refusing to cover the costs of care and continues to deny and delay approval for needed patient care.

Last week, the presidents of 10 Providence-affiliated physician groups in Los Angeles and Orange counties and the High Desert Region of San Bernardino County wrote a letter to Blue Shield urging the insurance company to improve its offer to ensure members get the care they need in a timely fashion and support market competitive wages for the caregivers and physicians who care for them.

“It has come to our attention that the proposed renewal rates you are offering in negotiations with Providence are below current market standards and are therefore a barrier to providing the high-quality care that our patients expect and deserve,” the letter reads.

The groups have more than 2,800 physicians serving 106,000 Blue Shield patients.

Their main concern is Blue Shield’s lack of response to the Providence negotiations to fairly adjust contracted rates before the contracts ends, even after requesting an extension to negotiations. Additionally, the escalating denials and delays in coverage for physician-ordered treatments, procedures and medications for their patients is of grave concern.

“The fact that Blue Shield continues to deny or delay coverage for necessary patient care at an alarming rate, with denials increasing by almost $250 million from 2019 to 2023, is egregious,” the letter states. “As physicians we cannot accept that our patients are often being denied treatment for essential care, including medications, therapies and procedures.”

As Providence reported last week, Blue Shield denials have increased by 11.7% just this year. That means Providence is not being paid for care provided. At the same time, Blue Shield of California has increased accounts receivable from 24.9% in 2019 to almost 37% in 2023, earning high interest rates on those funds while delaying payments.

Providence also relies on adequate and timely reimbursement to pay its employees market-competitive wages and to cover the rising costs of pharmaceuticals and supplies, which increased 19% from 2020-22. Doctors, too, said in their letter their pay is declining as they absorb costs that insurance is expected pay, reflective of a nationwide trend.

The doctors are concerned a failure to approve a new contract will result in disruptions in care for patients as they go through the process of changing health plans to maintain relationships with their trusted physicians and hospitals.

But with just days left before notices go out to patients to find new physicians and hospitals, no progress is being made. Providence is concerned for its patients. Health insurance should make care more accessible, but nearly two-thirds (62%) of patients surveyed say their insurer makes it harder to get services they need.

“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. We need a partner,” said Laureen Driscoll, chief executive of Providence California. “They must adjust their rates to compensate for the increased financial pressures on wages, pharmaceuticals and supply costs and the cost of advanced technology that helps improve patient outcomes.”


About Providence in California (South Division)
Providence South, encompassing all California operations, is an integrated delivery network that includes 17 hospitals in Northern and Southern California, comprising the organization’s South Division. In Northern California, hospitals include Santa Rosa Memorial Hospital, Queen of the Valley Medical Center, Petaluma Valley Hospital, Healdsburg Hospital, St. Joseph Hospital Eureka, and Redwood Memorial Hospital. In Southern California, Providence Saint Joseph Medical Center, Providence Saint John’s Health Center, Providence Cedars-Sinai Tarzana Medical Center, Providence Holy Cross Medical Center, Providence Little Company of Mary Medical Centers Torrance and San Pedro, Providence Mission Hospital, Mission Viejo and Laguna Beach, Providence St. Jude Medical Center and Providence St. Joseph Hospital, Orange. Supporting its acute care settings in California, Providence features hundreds of affiliated medical group clinics and outpatient centers, in addition to TrinityCare Hospice and TrinityKids Care pediatric hospice, Providence High School, home health care services, wellness centers and a multitude of telehealth services. Providence is committed to an enduring mission of outreach to the poor and vulnerable.

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