Thousands Face Higher Medical Costs After Rift Between Two California Health Care Giants

Thousands of Californians may have to pay out-of-network medical costs to go to their nearest hospital after contract negotiations between Adventist Health and Blue Shield of California — a major health care provider and health insurer in the state, respectively — fell through last week.

Adventist Health and Blue Shield had been in talks to reach a new contract for about 11 months, but failed to come to an agreement about reimbursement rates before the previous contract expired Dec. 1. This means people who had Blue Shield plans could be on the hook to pay higher out-of-network rates for hospital services such as lab tests and imaging, or have to travel long distances to seek care at an in-network hospital.

The development affects all of Adventist’s 17 hospitals in California, including Adventist Health St. Helena and Adventist Health Mendocino Coast. It applies to people with Blue Shield commercial, Medicare Advantage and Medi-Cal managed care plans.

It does not affect services at most of Adventist’s outpatient clinics. Those services are covered under a separate contract slated to expire in March or April 2024.

Blue Shield will continue to cover emergency care, the insurer said.

Adventist also contracts with insurers Anthem and Aetna, and says that patients who wish to continue receiving covered hospital services in the affected locations can contact those plans.

It’s not clear how many people are affected by the disruption in coverage. But in Tuolumne County alone, more than 6,000 Blue Shield members are no longer covered for hospital services at Adventist Health Sonora, an Adventist spokeswoman told the Union-Democrat.

In some rural parts of the state, including Mendocino County, Adventist is the only hospital or the closest one for miles, making the situation particularly concerning for patients belonging to Blue Shield who may have to drive further for in-network care or shoulder higher costs to pay for care at Adventist that is now considered out-of-network.

Contract negotiations are common between health care providers and insurers, and disputes often arise over reimbursement rates. In those cases, both sides sometimes agree to extend the contract by a few months to give themselves more time to negotiate without disrupting patients’ coverage.

Both Adventist and Blue Shield said they are disappointed they were not able to agree on terms for a new contract, and that they are willing to keep talking.

“We are deeply disappointed that we are unable to reach an agreement with Blue Shield,” Adventist said in a statement. “We remain open to discussions and will provide an update should the current situation change.”

Adventist said that in cases of emergencies, patients should go to the nearest hospital, regardless of their insurance or ability to pay.

Adventist said some people may be able to continue receiving hospital services at in-network rates by requesting “continuity of care” benefits from Blue Shield. This may be granted if the nearest hospital to a patient’s home is more than 30 miles away or if a patient’s in-network provider cannot perform the service they need.

“Our sincere hope is that we can continue the dialogue with Adventist Health leadership and establish a new contract that provides members with high quality care,” Blue Shield said in a statement. “We regret the inconvenience this causes our customers and members.”


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