California companies take on Sutter Health over cost of care

Some companies and labor unions are accusing Sacramento, Calif.-based Sutter Health of abusing its market power by demanding companies either sign an arbitration agreement to resolve any legal disputes with the health system or pay significantly higher rates for their employees' medical treatment.

The accusations are from a March 16 court filing by David Lansky, PhD, CEO of the Pacific Business Group on Health, which represents companies like Wells Fargo Bank and Chevron as well as the California Public Employees' Retirement System.

Companies that refuse to sign the arbitration agreement must pay 95 percent of Sutter's full charges for the care employees receive at Sutter's hospitals, surgery centers and clinics, according to Kaiser Health News.

In his court filing, Mr. Lansky says it's essential large companies employing people in Northern California have Sutter in their workers' insurance networks, due to the health system's large footprint. The system includes 24 hospitals and 34 surgery centers.

"Their choice is between two unacceptable alternatives," Mr. Lansky said in his filing. "Pay 95 percent out-of-network pricing for enrollees that access Sutter services, or agree to give up their claims in this litigation."

The litigation Mr. Lansky refers to is an ongoing class-action lawsuit that accuses Sutter of illegally inflating prices.

Sutter denies attempting to keep companies from joining the class-action, and argues the contract terms, including the arbitration provision, are reasonable.

"If self-funded payers wish to access the discounted rates that Sutter Health makes available under these contracts, it is reasonable to ask they abide by the package of terms that make those rates financially feasible," Sutter spokesman Bill Gleason told Kaiser Health News. "They should not be able to cherry pick which provisions apply to them and which do not."






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