Consumers Caught in the Middle of Contract Disputes Between Insurers and Providers

By Consumers for Quality Care, on March 6, 2024

A recent contract dispute between a major insurer and a health system in California put consumers in peril, causing them to be unsure if there would be disruptions with their health insurance or future medical care, according to KFF Health News.  These occurrences are expected to become more frequent as consolidation in the health care industry increases, a trend that is often detrimental for consumers. 

University of California (UC Health) and Anthem Blue Cross had been in contract disputes over, among other things, administrative practices and increasing labor and equipment costs. While both sides eventually reached a tentative deal, many consumers were left to wonder and worry whether they would have to change doctors or expect to incur higher out-of-pocket expenses.

Kristof Stremikis, the Director of Market Analysis and Insight at the California Health Care Foundation, says that consumers ultimately bear the brunt of these disputes, stating, “This type of contract dispute is a routine feature of the health care system. At the same time, from a patient’s perspective, it’s an unfortunate feature of our health care system because it creates uncertainty and anxiety.”

Consolidation in the health care industry has dramatically increased. While health systems argue these transactions will help consumers, a KFF study found that these mergers dramatically reduce competition while increasing the combined system’s market power, leading ultimately to higher prices for local patients and health care consumers. Stremikis highlighted how consolidation does not necessarily help consumers but can end up hurting them and the entire market, saying, “There is consolidation vertically up and down the supply chain and horizontally. So when there are disputes between these large entities, it has a larger and larger impact because there are fewer choices for patients.”

For cancer patients, the situation is even more dire. Cathy Jordan, a California resident, is receiving treatment for a rare form of cancer at UC Davis Health. Jordan was one of the Anthem-insured consumers who was at risk of losing coverage if contract negotiations fell through. Rebecca Brooks, Jordan’s oncologist, stressed how switching providers during cancer treatment is “incredibly disruptive.” In describing the consequences of these types of switches, Brooks believes “It’s a detriment to their care. It’s going to disrupt treatment and cause worse outcomes.”

For the moment, UC Health and Anthem Blue Cross have agreed to a contract extension until April 1 while the new terms of a final agreement are negotiated. Caught in the middle of these contract disputes are patients and consumers, who simply need their health care to work as intended. Additionally, decreased competition hurts consumers, often leading to fewer options for care and higher out-of-pocket costs. CQC urges regulators and lawmakers to scrutinize mergers and to ensure that consumers don’t foot the bill for these dangerous anti-competitive practices.