Time Is Ticking On Significant Health Plan Contract Negotiations
At Dignity Health, we’re committed to improving the health of the communities we serve, and especially the most vulnerable. This doesn’t happen without strong health plan partnerships. As the largest Medi-Cal provider in California, three out of every four patients who come to a Dignity Health hospital are covered by either Medi-Cal or Medicare.
Since September we have been in contract negotiations with the local Medi-Cal payer, Central California Alliance for Health (CCAH); to date, we have been unable to negotiate an agreeable equitable contract. If CCAH does not agree to a new contract with Dignity Health, CCAH will no longer consider Dignity Health Medical Group physicians and Mercy Medical Center in Merced as “in-network” beginning February 16, 2024. It is anticipated that CCAH will begin to reassign our Dignity Health Medical Group Primary Care patients to a new physician prior to this date. CCAH may direct their members to use providers in other cities.
It is important for the community to understand why we are in contract negotiations with CCAH. Contrary to popular belief, hospitals do not set their own prices for services. We contract with health plans like CCAH so we can be “in-network” for you. The details of the contract govern the amount we are reimbursed for the care we provide, the way claims get processed, and how referrals and authorizations are handled.
It is unfair for an insurer to pay us less than the cost of care; we lose money for every Medi-Cal patient we treat. Our Dignity Health network has faced a considerable financial impact with this contract, and we have not received a rate increase from CCAH in several years.
In Merced County, one of every two residents is covered by CCAH, and Mercy Medical Center provides the highest volume of care to CCAH members with approximately 3,900 admissions annually. Mercy Medical Center in Merced provides over 30,000 ER visits per year to CCAH patients – about 90 patients per day. Based on this information and the complexity of CCAH patients, our current reimbursement is not sustainable.
Our physicians are relied upon heavily in Merced County. There are an insufficient number of local primary or specialty care physicians to care for our population. Dignity Health has provided approximately 15,000 primary care, specialty care physician office and hospital visits for CCAH members to date. Additionally, Mercy Home Health had over 2,400 CCAH patients, which allowed them to be discharged from the hospital promptly by experienced nurses.
CCAH’s current proposal does not meet the increases needed to address inflationary costs over the next several years for the care our physicians and nurses provide. This would severely limit our ability to reinvest in patient care and invest in community resources. The community is counting on us to secure better terms and fair rates for the care we provide. We propose rate increases within reason that contribute to our ability to remain open and ready for any emergency and for whomever comes through our doors 24/7, 365 days a year.
We ask CCAH to come to the table with a genuine desire to partner and help us provide the best possible care for patients in our community. When we work together toward shared goals, we can make a meaningful impact on the lives of those we serve. If you have CCAH insurance, please call CCAH at 1-800-700-3874 to encourage their leadership to reach an agreement with Dignity Health.
Dale Johns is the President/CEO of Mercy Medical Center Merced.
Robert Quinn, MD, is the President/CEO of the Dignity Health Medical Foundation, System SVP Physician Enterprise West, CommonSpirit Health.