Contract impasse could affect thousands at Regence, Everett Clinic

EVERETT — Thousands of people who get their health care coverage through Regence, including Boeing and school employees, may need to find new doctors next month if The Everett Clinic and Regence BlueShield can’t agree on a new contract.

Regence sent a letter to its Medicare Advantage plan members that its contract with Optum — the parent company of The Everett Clinic and The Polyclinic — will end effective Dec. 5, because Optum demanded a 14.75% increase in negotiated rates.

The contract dispute affects everyone with a Regence plan, including state and other public employees and retirees with the Uniform Medical Plan, where the contract ends Dec. 19.

For Regence plan members, The Everett Clinic would be out-of-network, meaning patients could face much higher bills. If they choose new doctors, they could wait months to get their initial appointments.

A Regence spokesperson wrote in a statement: “We are disappointed that the for-profit, out-of-state owner of The Polyclinic and The Everett Clinic is planning to remove these local clinics from our provider network after demanding double-digit increases in what we pay them for care. … We are actively working to reach an agreement with the owner of the clinics, Optum — part of the largest health care company in the world — that is in the best interests of our members and customers.”

Regence did not confirm or deny the 14.75% increase in its letter to William Hogland, an insurance broker in Everett. He shared the document dated Nov. 17 with The Daily Herald. In other letters to plan members, Regence wrote “double-digit” or “unprecedented” increases.

Hogland worries about his Medicare Advantage customers.

“It’s going to increase their costs exponentially, and not having access to The Everett Clinic means they have to find a different provider,” he said. “I’ve contacted multiple networks and they’re just not out there.”

Open enrollment ended Nov. 21 for people who get insurance through the School Employees Benefits Board. For many other public employees and retirees, open enrollment ends Nov. 30. And according to several who wrote to The Herald, many employees had already made their choices before hearing the news.

Jen, a patient who agreed to talk with The Herald as long as her last name wasn’t published, wrote that finding care in Snohomish County will be a “nightmare” if The Everett Clinic is not in Regence’s network.

“It is very impactful for my family, as my oncologist — who monitors me for any new signs of thyroid cancer — would no longer be my provider,” she said.

The Washington Health Care Authority issued a fact sheet for affected Uniform Medical Plan members and said it “is working closely with Regence to ensure there is ample provider access.” The Uniform Medical Plan contract affects about 5,500 members who receive care at The Everett Clinic, and 10,800 members who receive care at The Polyclinic.

Staffing shortages, expensive temporary labor and inflation have plagued the health care industry since COVID struck. But, as Regence said in its letter, “families and businesses are also facing financial challenges with inflation and cannot afford the premium increases that would result from meeting Everett Clinic’s demand.”

John Campbell, 74, has been going to The Everett Clinic since 1985. He has had a Medicare Advantage plan with Regence for about five years. He dreads trying to find new doctors and build new relationships. But he also wouldn’t be able to afford it if Regence increased the premiums by 15%. So on Tuesday evening he was shopping for plans online for him and his wife, ideally that include The Everett Clinic.

“I am searching for a new plan, for something that we’re going to be able to afford, and have reasonably good coverage for a couple of old people,” he said.

In September, the Office of the Insurance Commissioner approved Regence BlueShield to increase premiums for individual and small group plans by an average of 13.7% or 5.8%, respectively.

The Herald reached out to Regence BlueShield for details about how The Everett Clinic’s price increase differed from expectations and other providers, and how much Regence expected premiums would change if it agreed to the increase. Regence did not respond to those questions.

Regence BlueShield is a nonprofit, independent licensee of the Blue Cross and Blue Shield Association. Regence reported over $95.8 million in profits in 2021, largely from investment gains, according to financial statements reported to the state Office of the Insurance Commissioner. It ended 2021 with a $1.55 billion surplus. Regence actually reported an underwriting loss: It spent more in claims and operating the business than it took in with premiums.

The Everett Clinic is part of Optum, which in turn is part of UnitedHealth Group, a massive health care company that earned $17.3 billion in profits in 2021. It has over $42 billion in cash and short-term investments as of Sept. 30.

An Optum spokesperson wrote: “Supporting our patients with compassionate, quality care is our highest priority. We remain hopeful that we will reach an agreement with Regence so patients will have continued access to their trusted Polyclinic and Everett Clinic doctors and care teams.”

Optum declined to answer more specific questions.

Nancy Matlack, a retired school teacher told The Herald: “This is just plain mean! Under the guise of saving money and controlling costs, Optum is causing HUGE anxiety and feeding mistrust in an industry already rife with it.”

Nora Davis, a volunteer with Statewide Health Insurance Benefits Advisors in Snohomish County, noted seniors will have options, at least. She helps them decide on the best benefits for them, which they must do by Dec. 7. If Regence and Optum don’t reach a deal, Medicare Advantage subscribers could change plans now or during the first three months of 2023.

Davis recommended the best option for people who want The Everett Clinic in-network is to verify directly with the clinic which Medicare Advantage plans will include Optum in 2023.

Davis used to work for a health plan and has volunteered with SHIBA for six years, since about the time of another public contract dispute between Regence and The Everett Clinic. In 2016, the parties settled about two weeks after the first notifications of a possible contract termination. Going forward, Davis said, The Everett Clinic will probably want to stay in Regence plans and vice versa.

“Sometimes these things happen,” she said. “Everett Clinic might be out of network for Regence for some amount of time, maybe for a whole year, until they somehow come to some agreement to be in-network.”

Dave Iseminger, director of employees and retiree benefits at the state Health Care Authority, said Public Employees Benefits Board members would have no plan options that would include The Everett Clinic, if negotiations fail. He expressed optimism, while recognizing the current situation is “overly stressful,” particularly at the end of open enrollment and right before Thanksgiving.

In his experience, the insurers and providers usually reach a deal before the end of the contract.

“The fact that the parties are at the table is a really encouraging sign,” Iseminger said. “There is a lot at stake, on both sides.”

Resources:

• People covered by PEBB or SEBB plans can find updates at hca.wa.gov/about-hca/news/announcements

• Those eligible for Medicare can look for assistance at insurance.wa.gov/find-local-shiba-office

Joy Borkholder is the health and wellness reporter for The Daily Herald. Her work is supported by the Health Reporting Initiative, which is sponsored in part by Premera Blue Cross. The Daily Herald maintains editorial control over content produced through this initiative.

Joy Borkholder: 425-339-3430; joy.borkholder@heraldnet.com; Twitter: @jlbinvestigates.