Cigna, UC Health in contract dispute with July 1 deadline on patient coverage

The University of California Health system and Cigna must reach a new contract in the coming weeks, or risk coverage for a large group of Sacramento-area patients.

UC Davis Health said it is requesting reasonable payment hikes to cover the hospital system’s rising costs. Cigna called the UC’s proposal “unsustainable” and “well above market norms.”

The current agreement expires July 1. Negotiations are ongoing.

UC Davis Health said in a notice to patients in April that the system was seeking higher payment rates from Cigna due to inflation, rising costs for medical supplies, maintenance expenses and in order to offer competitive wages for health care workers.

“We believe Cigna can and should cover the increased costs of care for its members,” the notice read.

Cigna, meanwhile, cast the UC proposal as an unreasonable increase.

“We value our relationship with UC Health and recognize the importance of maintaining access for our customers, but price increases at that level are unsustainable for the employers and families we serve throughout the state of California,” the insurer said in a statement Friday. “We remain actively engaged in discussions and are committed to reaching a solution that helps prevent significant cost increases while supporting patient access.”

Health insurers and hospitals tend to reach agreements in such cases, experts say, but last-minute contract agreements still leave patients to wonder whether they’ll soon face major disruptions to their medical coverage. And with hospitals, insurers and employers facing competing economic strains and uncertainties, contract negotiations may be more likely, now, to drag on until mere days or weeks ahead of the deadlines. Inflation has driven up hospitals’ costs, insurers see patients using more medical care than expected and employers are sensitive to large premium increases.

Last year, the UC system faced a similar situation with a Blue Shield of California contract, and Sutter Health reached a contract renewal with Aetna days before the previous agreement was set to expire.

Patients with PPO plans — who represent the majority of Cigna-covered UC Davis Health patients — can continue to receive care from UC Davis Health, but would take on a “significantly higher” share of the costs, the system said. Patients can also file “continuity of care” forms to seek exceptions and continue to receive coverage from Cigna for certain chronic or acute conditions.

The agreement covers about 100 patients in Cigna HMO plans in the Sacramento area, said Steve Telliano, spokesperson for UC Davis Health, in an email Friday. The change could also impact a “few thousand” patients covered by PPO plans, but the hospital system doesn’t have exact figures.

More information for patients — including the specific hospitals, clinics and health insurance plans affected, and instructions for seeking continuity of care exemptions — is available on Cigna’s and UC Davis Health’s websites.

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