Aetna, Dignity fail to agree on contract. What does that mean?

Apr. 5—It's official: As of midnight Thursday, Central Coast patients insured by Aetna no longer have in-network access to one of San Luis Obispo County's two major healthcare providers.

Aetna and Dignity Health have been negotiating a contract to renew commercial HMO, POS, PPO, Medicare Advantage and Aetna Whole Health provider agreements in California, Arizona and Nevada, for several months.

But those negotiations have yet to yield results, and the deadline has passed.

In a statement to The Tribune, Dignity Health said the hospital system "has been diligently working to negotiate a new, mutually beneficial contract with Aetna that puts patients first, and keeps Dignity Health facilities, providers and services in-network for Aetna members."

Originally, the two companies had a deadline of April 1 to negotiate the new contract, but both agreed to extend that deadline through Thursday night to give more time to reach an agreement.

As of Thursday morning, however, Dignity said the two companies have "been unable to reach an agreement."

"As a result, beginning at midnight on April 4, 2024, most Dignity Health facilities and providers in California will no longer be considered part of Aetna's network," the statement read. "We will continue to work in the best interest of our patients in hopes of reaching a new contract as soon as possible."

It's unclear how many clients Aetna has in San Luis Obispo County.

Dignity Health: 'We are disappointed an agreement could not be reached'

The two companies first notified customers of the potential changes in February, warning that without an agreement, "Aetna will no longer include Dignity Health hospitals, physicians, ambulatory surgery centers and other providers as in-network."

Dignity Health owns roughly 30 hospitals throughout California, spanning the entire state, as well as a number of medical clinics and groups. It has locations in Northern, Central and Southern California; the Sacramento area; and the Bay Area, according to its website.

That includes three local hospitals: Arroyo Grande Community Hospital, French Hospital Medical Center in San Luis Obispo and Marian Regional Medical Center in Santa Maria.

Dignity also operates Pacific Central Coast Health Centers, a clinic organization comprised of nearly 50 health centers located from Templeton to Lompoc, according to its website.

For San Luis Obispo County residents, a halt to coverage could mean having to travel out of the area for specific specialists, or pay out-of-network fees to stay local.

"It's important to emphasize that our commitment to delivering high-quality healthcare for patients remains unwavering," Dignity's statement read. "We are disappointed an agreement could not be reached, and we sincerely appreciate patience and understanding during this time."

Why have Aetna and Dignity been unable to reach agreement?

Aetna, which provides health and dental insurance for roughly 39 million members across the United States, has been a subsidiary of CVS Health since 2018.

CVS Health reported an annual revenue of $322.5 billion in 2022, the most recent data available.

In a statement to The Tribune on Friday, Aetna said it is "dedicated to providing our members with access to affordable, quality, convenient care that helps them achieve better health."

"While our contract with Dignity Health has ended, we are continuing our discussions in hopes of reaching an agreement that brings Dignity Health facilities and physicians back into our network," the statement said.

The insurance provider noted however that it has "a responsibility to members and employers to keep health care services affordable and accessible."

"Negotiating fair reimbursement rates is directly connected to our ability to keep member costs low and maintain access to quality care," the statement said. "We are continuing to negotiate with Dignity Health in hopes of reaching a fair contract that benefits our members."

Dignity meanwhile contends that it has been advocating for "fair, equitable contracts."

"As a not-for-profit healthcare provider, we face challenges associated with rising costs and inflation," the company said in its statement Thursday, "and fair, equitable contracts are essential for us to continue delivering high-quality, safe and consistent patient care."

What happened during previous contract disputes between Dignity, insurance providers?

This isn't the first time a Dignity Health contract dispute has left Central Coast patients without care.

In July 2021, Anthem Blue Cross announced it would no longer work with Dignity Health after contract negotiations stalled. By August, the two had come to an agreement that meant thousands of San Luis Obispo County residents would retain access to their doctors.

Before that, in September 2020, Dignity and Cigna reached a multi-year agreement to keep Dignity within the Cigna network after a nine-month standoff in which Dignity patients didn't have Cigna coverage.

In the 2021 dispute, Anthem contended that Dignity Health's rates were "some of the highest among all health systems in California" and that its proposed rate increases that year were simply too high to accept as is.

A 2020 RAND Corp. study of U.S. health system rates compared with Medicare found Dignity charged private insurance providers roughly three times the Medicare rates — though they were not the highest in the nation, nor even in California.

In the study, the median cost for inpatient or outpatient care at Dignity Hospitals was roughly comparable to two other California health systems, Sutter Health and Adventist Health — which recently purchased two former Tenet Healthcare hospitals in San Luis Obispo County.

Dignity's rates were below HCA Healthcare and Quorum Health, both of which operate in California as well.

What happens now?

According to a FAQ shared on the Dignity Health website, patients will need to submit a Continuity of Care form to Aetna to ensure procedures scheduled after Thursday can move forward, according to the website.

Patients should contact Aetna to determine if the procedure will be authorized at a Dignity Health facility and to obtain a Transition Coverage Request form, Dignity said.

Emergency care will be covered by Aetna at all hospitals, regardless of network status, Dignity Health added.

If Aetna members have additional questions, they should contact Aetna, or a Dignity Health Customer Service Representative at 877-729-2669 for further assistance, according to the FAQ.

Are you a Central Coast Aetna customer impacted by the Dignity Health contract issue? Reach out to reporter Kaytlyn Leslie at [email protected] to share your thoughts and concerns. Your comments may be used in future stories.

This story was originally published April 4, 2024, 2:37 PM.

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