Hospital and insurer in negotiations that could leave public employees paying out of network costs

July 20, 2022 — A recent announcement by Adventist Health about its negotiations with Anthem Blue Cross, the county’s main insurance provider, has caused widespread panic. The contract between Anthem and Adventist, a faith-based nonprofit hospital system that manages all three of the county’s hospitals, was originally due to expire on July 18, but has been extended to August first. Adventist posted FAQs on its website this week, directing patients to call the number on their insurance card for answers to most questions. But patients are advised that if they are in the hospital after midnight on August first, Anthem could choose to transfer them to another hospital. Some patients may be able to continue receiving care for some time as a “continuity of care service.” In a letter to patients last month, Adventist claimed that Anthem has enjoyed record profits for the past two years, but continues to pay Adventist “substantially less than other hospital systems. Anthem is one of our lowest-paying health plans, and we can’t continue to provide quality care for patients at such significantly reduced rates.” Adventist offered to be interviewed on this subject, but we declined because President Judson Howe refuses to speak to us about the faith-based hospital’s policies on abortion, which remains legal in the state of California. Recent studies show that much of the high cost of doing medicine in the state of California is due to a lack of competition, both in healthcare and insurance markets. According to a study by the California Healthcare Foundation, titled, “Markets or Monopolies,” “the preponderance of evidence suggests that hospital consolidation leads to higher prices… Furthermore, workers bear the burden of these increased premiums as employers depress wages to pay more for health insurance coverage.” The MediCare Payment Advisory Commission told Congress in 2018 that “hospitals with large market shares have the leverage to negotiate relatively high prices from commercial insurers.” This affects small local governments offering employer insurance, as well as private citizens who pay for their own coverage. The county’s health plan is currently close to $5 million in the hole, with the county paying about 81% of the cost of skyrocketing claims, according to a presentation by Deputy CEO Cherie Johnson during last month’s budget hearings. “So we would really need to change our whole plan,” she told the Board of Supervisors. “We need to be looking at the deductibles, the co-insurances…Fully insured is where we’re looking at, so we know, with a fully insured plan, what your payments are every single month. Right now, we don’t know. We project what we believe our monthlies will be, but it’s unpredictable. We could get a $60,000 claim week, and then the next week, we could get $116,000.” Julie Beardsley, President of SEIU Local 1021, which represents most county workers, said it’s time to cut loose. The union is in a battle with the county, which is offering a 0% cost of living allowance. “The county has been stalling about looking into new plans,” she said at a union rally during the budget hearings. “Obviously Adventist has kind of monopoly here in the county and they can charge whatever they want, but we need to look at other plans.” Adventist told its patients that in the last five years, it’s given away more than $276 million in charity to those in need. We have not had the opportunity to review detailed financial information for Adventist Health. But according to a report by Stat, a healthcare-focused news website produced by Boston Globe Media, nonprofit hospitals in the U.S. received an estimated $25 billion in tax exemptions in 2015. Its authors, Ge Bai and David A. Hyman, write that “many nonprofit hospitals do not provide enough charity care to justify their exemptions…More than one-third of nonprofit hospitals (36%) provided less than $1 of charity care for every $100 in total expenses.” Nonprofit hospitals are exempt from federal, state, and local property taxes, and donations to them are tax-deductible. Ge and Hyman argue that, “If nonprofit hospitals are unwilling to provide sufficient charity care to justify the amount of their current tax exemption, there is no reason we should deprive local communities of the property tax revenues that allow them to fund local schools, parks, and other public services.” Assembly member JimWood’s office responded to our inquiries with a statement reading in part that the Assembly member understands that, “In this case, Adventist is the one initiating the action to renegotiate, requesting higher reimbursements in a number of areas…On the other hand, Anthem is seeking an agreement that would not reflect significant cost increases to the employers, employees or others with Anthem coverage. It’s important to note that the entities being affected, such as the school districts, city of Ukiah and (the) county, are self-insured and, as suc...