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Tuesday, Aug 16, 2022
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Health Net Terminates Six Hospital Contracts

The announcement that Health Net Inc. would terminate payment contracts with six Southern California hospitals came a surprise to Tenet Healthcare Corp., owner of the hospitals. The Woodland Hills-based insurance carrier ended the contracts Dec. 21, citing an inability of the two sides to negotiate new reimbursement rates. Health Net maintains that growth in reimbursement rates should be in line with medical cost inflation as measured by the medical consumer price index, which averaged about 3 percent last year. But in negotiations, Health Net and Tenet couldn’t agree on prices. “Our goal is to help preserve affordable benefits for our customers, not pass along inflated health care costs,” said Steve Sell, president of Health Net’s Western Region Health Plan, in a statement. Tenet, based in Dallas, issued a statement to the Business Journal saying that negotiations had proceeded for months on a new contract, and that at the last meeting Tenet thought the two sides had reached an agreement. The terminations went into effect at midnight Dec. 21. “It is unclear to us as to why Health Net issued a contract termination and publicly released inaccurate information,” the Tenet statement said. “We have full agreement with Health Net on reimbursement rates at these six hospitals. We are puzzled and disappointed by their public comments.” The affected hospitals are Desert Regional Medical Center in Palm Springs, Fountain Valley Hospital and Medical Center in Fountain Valley, John F. Kennedy Memorial Hospital in Indio, Lakewood Regional Medical Center in Lakewood, Los Alamitos Medical Center in Los Alamitos and Placentia Linda Hospital in Placentia. Jim Lott, executive vice president of the Hospital Association of Southern California, called the dispute a natural part of the healthy tension between buyers and sellers of health care. Typically, both sides position themselves to try to leverage down rates if and when a deal is reached. “In a market like Southern California, where health plans have a dominant role, these negotiation standstills occur more often than in other parts of the state,” he said. “It doesn’t mean they eventually won’t work out terms, but this is where they are now.” Lott expects these stand-offs will become more common as the economic pressure on both sides grows as federal health care reform is implemented in coming years. Brad Kieffer, a spokesman for Health Net, said no patients were turned away from the hospitals. Health Net is communicating with doctors so they will refer patients to other nearby hospitals that are part of the company’s provider network. Telemedicine Initiative LiveHealth Online, a new service from Anthem Blue Cross that will allow patients to talk with their doctor via Internet video, is set to launch in the next few months. The Woodland Hills insurer said the first users of the system will be small- and large-group fully-insured customers and self-funded national employers. A spokesman said the company was not yet ready to say which employers or groups in the San Fernando Valley would have access to the new service, but such information will be available soon. Doctors will offer members live consultations from 7 a.m. to 11 p.m. daily. Typically, telemedicine is used to access a doctor about sore throats, allergies, infections and nutrition advice. According to a 2012 study by the University of Pittsburgh, e-visits that used email and electronic patient health records had similar outcomes to in-person visits for treating sinus and urinary tract infections. Anthem’s system will create a complete record of each online e-visit, and with the patient’s permission, forward the record to their primary care doctor to help coordinate care. The company believes e-visits will offer customers an alternative to costly emergency room and urgent care visits. Technology for the venture will come from American Well, a Boston software firm, and it will be managed by UniCare, a unit of Indianapolis-based WellPoint Inc., the parent of Anthem Blue Cross. Staff reporter Joel Russell can be reached at (818) 316-3124 or by e-mail at jrussell@sfvbj.com.

Joel Russel
Joel Russel
Joel Russell joined the Los Angeles Business Journal in 2006 as a reporter. He transferred to sister publication San Fernando Valley Business Journal in 2012 as managing editor. Since he assumed the position of editor in 2015, the Business Journal has been recognized four times as the best small-circulation tabloid business publication in the country by the Alliance of Area Business Publishers. Previously, he worked as senior editor at Hispanic Business magazine and editor of Business Mexico.
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