Blue Cross Releases Its Roster of Preferred Hospitals

In an effort to drive down health care costs, Blue Cross of California released a list of its preferred hospitals Wednesday that critics say could threaten the solvency of private urban community hospitals left off the roster.

After months of negotiation, Blue Cross released the names of 158 hospitals in California it said would get its preferred contracts.

A second tier of 63 hospitals would be part of the Blue Cross network but would have to overcome a number of hurdles in order to hang on to their customers. These include co-payments that are about $250 per hospital visit higher than those charged Blue Cross members who use the preferred hospitals.

The hospitals on the second tier would also be kept out of the insurer’s accelerated electronic payment-and-claims-approval process, and they would not be included in marketing and advertising promotions.

In Southern California, most major hospitals were among those receiving the preferred contracts, including Cedars-Sinai Medical Center, USC University Hospital and UCLA Medical Center in Los Angeles; Valley Presbyterian Hospital in the San Fernando Valley; and Hoag Memorial Hospital and UC Irvine Medical Center in Orange County.

But a number of major hospitals either were relegated to the second tier or left off the list entirely. Among those in the second tier that usually are ranked among the area’s best are Torrance Memorial Medical Center, Orthopaedic Hospital in Los Angeles and Holy Cross Medical Center in the San Fernando Valley. Blue Cross said negotiations are still underway with hospitals not under contract, including such major specialty hospitals as St. Vincent Medical Center and Good Samaritan Hospital in Los Angeles.

The new two-tier system will initially apply to Blue Cross members with individual policies and those enrolled in plans offered by businesses with 50 or fewer employees, about 39% of the insurer’s 3.1 million clients in California. Ultimately, Blue Cross would like the system to extend to all its members. Blue Cross said the higher co-payments at second-tier hospitals became effective for most members on Jan. 1.

As the largest private insurer making payments to public and private hospitals in California, Blue Cross’ new policy could have a devastating impact on financially shaky hospitals, critics said.

The critics said the new program would drive patients away from some hospitals through the system of disincentives and would ratchet down reimbursements to all hospitals. Hospital officials complained that Blue Cross forced them to renegotiate contracts at less favorable rates in order to qualify as a preferred hospital.