On a Health-Care Island

Thousands of Alamedans can’t use Alameda Hospital for basic care, because of a dispute with health insurers.


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Illustration by Heather Hardison

Alameda Mayor Trish Spencer is a 10-year breast cancer survivor. But because of a long stalemate between Alameda Hospital and large health-care insurance providers, Spencer can’t use her hometown hospital for recurring treatments and routine tests.

And she’s not alone. Thousands of Alamedans who have health-care coverage through Anthem Blue Cross, Blue Shield of California, Aetna, and United Health Insurance have been unable to use Alameda Hospital since the end of 2015. And Cigna only agreed to terms in March.

Officials with Alameda Health System, which operates Alameda Hospital, along with Highland Hospital in Oakland, San Leandro Hospital, and other smaller clinics around the East Bay, said the dispute centers on insurance companies’ insistence on paying low reimbursement rates. But the coverage dispute is particularly frustrating to Alamedans, who in addition to paying monthly insurance premiums also must pay an annual $299 hospital parcel tax that is intended to keep Alameda Hospital open—a facility they can’t now use for routine health care.

“It’s hard for me and others to believe more can’t be done,” Spencer said in an interview. “It’s a big problem and so many like me are extremely inconvenienced by it.” Instead of traveling down the road from her home for treatments, Spencer is forced to go to Sutter Health’s Eden Medical Center in Castro Valley for procedures related to her cancer treatment. The entire trip can take as long as six hours. “It’s a big imposition to ask someone to take you Eden and come back later to pick you up,” she said.

The public outcry over the health-insurance contract fight heated up last summer when residents voiced disapproval at a public forum organized by the Alameda Healthcare District. A well-circulated petition also called for an quick end to the impasse. “I’m surprised it wasn’t settled a year ago,” said Spencer. “I’m sure most us speaking at the meeting didn’t think we would still be at the same point today.”

The number of Island residents shut out by the stalled contract negotiations is more than 2,000 and primarily affects those not old enough to receive Medicare. Alameda Hospital’s emergency room is not affected by the dispute.

In addition to paying the $299 annual hospital parcel tax, Alamedans, like everyone in Alameda County, also contribute a half-cent of local sales tax through Measure B to fund the operations of Highland Hospital and the Alameda Health System. “We’re not getting what we voted for,” Spencer said of the parcel tax’s promise of maintaining Alameda Hospital for everyone in the community. In March, the Alameda City Council authorized Spencer and Councilmember Jim Oddie to write a letter to the Alameda Heath System and the insurers urging a quick resolution to the dispute.

The contract impasse also has drawn concern from various members of the Alameda Healthcare District board, which oversees the hospital’s operations. Board Director Dr. Robert Deutsch has been vocal about the languishing negotiations for many of the same reasons Spencer has laid out. “It’s unprecedented,” said Deutsch, who has practiced internal medicine at Alameda Hospital for 36 years. “We’ve always been under contract with essentially all the health plans.”

Deutsch understands Alameda Health System’s negotiating position of seeking better rates for its services, but he also believes Alamedans are being disproportionately affected. “Alamedans have always been able to use their community hospital, and for the first time, they are being discouraged, if you will, from using their community hospital because of the lack of a contract. I understand from the system’s standpoint, they want to get what they consider adequate and fair rates, but the community is becoming collateral damage. They’re in this fight between Alameda Health System and Blue Cross and Blue Shield. It’s the citizenry that gets caught in the middle of all that and now have to go off-island if they want to be ensured of not incurring large charges,” he said. “It’s not a good situation for the people of Alameda. That’s the bottom line and the system is looking out for the system, which is understandable, but I have been trying to be the gadfly to remind the system about the hardship that is being inflicted on the community.”

Alameda Health System created a workaround called a “Self-Paid Discount Policy” to try to help affected residents, but it has been ineffective, Deutsch said. After he became aware of several instances in which patients were forced to contest some charges with their insurance carriers, Deutsch began dissuading his patients from using the program.

David Cox, chief financial officer for Alameda Health System, acknowledged that some patients are reticent to use the self-paid policy, but he said the hospital provider will continue to work on improving it.

Cox said that under the previous contracts, Alameda Hospital was losing money on each patient insured by these health insurance providers. “The reality is Alameda Hospital is not viewed by commercial payers as desirable, neither is San Leandro Hospital, neither is Highland Hospital,” said Cox. He explained that all three facilities have patient mixes heavily stacked with people on Medicare or Medi-Cal, with smaller pools of potential paying customers for commercial insurers.

Cox said that Alameda Health System has attempted to convince insurance companies their costs will go up if patients are forced to use Alameda Hospital’s emergency room. “That’s gotten their attention,” he said.

Cox said in early April that an agreement with Aetna was imminent, but that the negotiations with United Health Insurance, Anthem Blue Cross, and Blue Shield of California remain stalled.

After 16 months, Deutsch is not hopeful. “I don’t know if there’s any end in sight.”

 

Published online on May 3, 2017 at 8:00 a.m.

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