After Zoe Friedland grew to become pregnant together with her first little one, she was choosy about selecting a physician to information her by supply.
“With so many unpredictable things that can happen with a pregnancy, I wanted someone I could trust,” Friedland mentioned. That individual additionally needed to be within the medical insurance community of Cigna, the insurer that covers Friedland by her husband’s employer.
Friedland discovered an OB-GYN she favored, who informed her that she delivered solely at Sequoia Hospital in Redwood City, California, part of San Francisco-based Dignity Health. Friedland and her husband, Bert Kaufman, dwell in Menlo Park, about 5 miles from the hospital, in order that was not an issue for them — till Dec. 12.
That’s the day Friedland and Kaufman acquired a letter from Cigna informing them their care at Sequoia may not be coated after Jan. 1. The insurance coverage firm had not signed a contract for 2020 with the hospital operator, which meant Sequoia and plenty of different Dignity medical services across the state would not be in Cigna’s community within the new yr.
Suddenly, it seemed as if having their first child at Sequoia may price Friedland and Kaufman tens of hundreds of .
“I was honestly shocked that this could even happen because it hadn’t entered my mind as a possibility,” Friedland mentioned.
She and her husband are amongst an estimated 16,600 folks caught in a monetary dispute between two gigantic well being care corporations. Cigna is likely one of the largest medical insurance corporations within the nation, and Dignity Health has 31 hospitals in California, in addition to seven in Arizona and three in Nevada. The contract battle impacts Dignity’s California and Nevada hospitals, however not those in Arizona.
“The problem is price,” Cigna mentioned in an announcement simply earlier than the outdated contract expired on Dec. 31. “Dignity thinks that Cigna customers should pay substantially more than what is normal in the region, and we think that’s just wrong.”
Tammy Wilcox, a senior vp at Dignity, mentioned, “At a time when many nonprofit community hospitals are struggling, Cigna is making billions of dollars in profits each year. Yet Cigna is demanding that it pay local hospitals even less.”
In 2018, the newest full yr for which earnings knowledge is accessible, Cigna generated operating income of $3.6 billion on income of roughly $48 billion. Dignity Health reported operating income of $529 million on income of $14.2 billion in its 2018 fiscal yr.
It’s attainable Cigna and Dignity can nonetheless attain an settlement. Both sides mentioned they are going to preserve making an attempt, although no talks are scheduled.
Disagreements between insurers and well being methods that go away sufferers stranded are a perennial problem in U.S. well being care. Glenn Melnick, a professor of well being economics on the University of Southern California, mentioned such disputes, that are disruptive to shoppers, are sometimes settled.
Melnick believes Dignity is utilizing an “all or nothing” technique in contract negotiations, which means both all its services are within the insurer’s community or none are.
“This allows them to increase their market power to get higher prices, which is not necessarily good for consumers,” Melnick mentioned.
Dignity replied in an emailed assertion: “We do not require payers to contract with all or none of Dignity Health’s providers. We do try to make sure patients have access to the full range of Dignity Health services and facilities in each of our communities.”
Dignity faces a lot of authorized and monetary challenges whereas it really works to implement a February 2019 merger with Englewood, Colorado-based Catholic Health Initiatives that created one of many nation’s largest Catholic hospital methods — often known as CommonSpirit Health.
California Attorney General Xavier Becerra accepted the take care of conditions, together with that Dignity’s California hospitals spend $10 million within the first three years on companies for folks experiencing homelessness and provide free care to extra low-income sufferers.
The requirement to deal with extra poor sufferers at no cost adopted a interval, from 2011 to 2016, during which Dignity’s charity care declined about 35% whereas its internet revenue was $three.2 billion.
Last October, CommonSpirit introduced an working lack of $582 million on income of practically $29 billion for the 2019 fiscal yr, its first annual monetary assertion after the merger took impact. Much of the loss was as a result of merger-related prices and particular fees.
The identical month, Dignity accomplished a five-year “corporate integrity agreement” with the U.S. Office of the Inspector General following an investigation into the way it billed the federal government for hospital inpatient stays. Dignity mentioned it “fully complied” with the settlement.
Dignity can be defending itself in a class-action lawsuit alleging that it payments uninsured sufferers at grossly inflated charges although it claims to supply “affordable” care at “the lowest possible cost.”
More lately, an appeals courtroom choose ruled Dignity could not charge higher prices — typically so much increased than state-set charges — for treating enrollees of L.A. Care’s Medi-Cal well being plan at its Northridge Hospital Medical Center.
Dignity disagreed with the courtroom’s ruling in that case, saying that though the Northridge facility didn’t have a contract with L.A. Care, lots of the well being plan’s enrollees who initially sought emergency therapy there stayed within the hospital for added care after they’d been stabilized. The hospital “seeks appropriate reimbursement for providing this care,” Dignity mentioned.
If Dignity doesn’t attain an settlement with Cigna, its hospitals, outpatient surgical procedure facilities and medical teams in most of California will quickly be out-of-network for a lot of Cigna enrollees. In-network protection for Open Access (OAP) and Preferred Provider (PPO) ended Feb. 1, and for HMO sufferers it’s set to finish April 1.
Peter Welch, president and basic supervisor for Cigna in Northern California and the Pacific Northwest, mentioned Cigna can present “adequate access” to different hospitals and medical doctors.
Certain Cigna enrollees can apply to proceed visiting Dignity services and medical doctors beneath California’s Continuity of Care regulation, enacted in 2014. Eligible enrollees embrace sufferers with continual situations, these already scheduled for pre-authorized companies, folks in want of emergency care and pregnant ladies of their third trimester.
Friedland and Kaufman utilized, hoping she would have the ability to proceed seeing her Dignity-affiliated OB-GYN at in-network charges.
On Jan. 22, lower than a month from Friedland’s Feb. 15 due date, they acquired written affirmation that their request had been accepted. They wouldn’t have to buy a brand new physician or face stiff medical payments in spite of everything.
Early Tuesday night, Friedland gave delivery to a child woman, Eliza, who entered the world 11 days sooner than anticipated, weighing in at 7 kilos, three ounces.
“While the ordeal was stressful, and the communication fraught, we were happy to receive confirmation of continuity of care and that it ended in the best possible way — with the birth of our healthy baby daughter with the provider where we established care,” Kaufman mentioned. “For the sake of those caught in the middle and now having to start relationships with new health care providers, we hope the two sides can come to an agreement.”
Kaiser Health News (KHN) is a nationwide well being coverage information service. It is an editorially impartial program of the Henry J. Kaiser Family Foundation which isn’t affiliated with Kaiser Permanente.