More than 110,000 Californians With Blue Shield Insurance Will be out-of-network for Providence starting June 1

Emergency Room Providence St. Joseph Hospital in Eureka. [Photo by Ryan Hutson]

On Monday, more than 110,000 patients will be notified they will lose in-network coverage to Providence hospitals, clinics and affiliated physicians starting June 1 because due to Blue Shield’s refusal to cover the cost of care and its continued denials and delays in approving needed patient care.

This week the presidents of 10 Providence-affiliated physician groups in southern California 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 earlier this 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.”