Adventist Health renews contract with Blue Shield

Tuolumne County residents who have health insurance from Blue Shield of California can rest a little easier over Christmas knowing that it has reached a new agreement with Adventist Health, which runs the county’s only hospital, to provide innetwork coverage for their medical needs.

A rift between the two sides erupted into public view earlier this month when Adventist Health announced the expiration of its previous contract with the Oakland-based health insurance giant due to failed negotiations over reimbursement rates.

The contract’s expiration meant that more than 6,000 Tuolumne County residents who have health insurance plans through Blue Shield of California, along with an untold number of other Californians, were facing higher costs in the new year for any medical care they receive at Adventist Health’s 18 hospitals in the state, including Adventist Health Sonora.

No details about the terms of the new agreement, including when this one will expire, had been publicly released by either side as of Friday morning.

A public relations firm hired by Blue Shield of California to assist them Friday morning “given the holidays and short staffing” stated that no further details about the agreement were being released at this time and deferred questions to Blue Shield of California’s spokespeople.

Blue Shield of California did not immediately respond to questions sent Friday morning.

“As a mission-driven health plan, our goal is for our members to have access to quality care that’s sustainably affordable,” Aliza Arjoyan, Blue Shield’s senior vice president of Provider Partnerships and Network Management, stated in a news release provided by the company’s

hired PR agency. “Adventist Health has been a part of Blue Shield’s network of providers for a long time, and I look forward to continued collaboration with the hospital system.”

Jaquelyn Lugg, spokeswoman for Adventist Health Sonora, said there were no additional details she could send at this time in response to questions sent by The Union Democrat Friday morning.

Adventist Health stated in a news release that the new agreement is effective going back to Dec. 1, when the previous contract expired.

“We are pleased to continue our long-working relationship with Blue Shield of California,” Kerry L. Heinrich, president and CEO of Adventist Health, stated in the news release. “Our mission calls us to provide access to high-quality care close to home in the communities we serve, and we are excited to continue caring for Blue Shield members.”

The dispute centered around the amount of money that Blue Shield of California pays to Adventist Health for services provided to its members.

Adventist Health said it needed a higher reimbursement rate from Blue Shield of California due to its costs rising by 15% over the last several years, largely due to inflation and increased labor costs since the COVID-19 pandemic.

Blue Shield of California said it had been negotiating in good faith to establish a new contract that would be sufficient to cover Adventist Health’s costs and allow the company to continue offering insurance plans at competitive prices, but the health care provider’s demands “did not make that possible.”

Neither side would disclose the previous reimbursement rate and how much more Adventist Health was seeking, though Lugg described it as “a small fraction” of the 15% increase in costs.

Adventist Health is a nonprofit hospital system based in Roseville that operates 26 hospitals and 400-plus clinics in California, Oregon and Hawaii. It most recently reported $5.4 billion in total revenue and $52 million in income during the first half of this year, after nearly $500 million in losses last year.

Blue Shield of California has 4.5 million members in the state. The company’s financial statements for 2020 boasted total revenue of $21.8 billion and net income of $680 million that year, though it reported a loss of nearly $1 billion in 2022.

Much of the losses incurred by both companies were blamed on rising medical costs.