The Everett Clinic Founders Building on Wednesday, Nov. 23, 2022, in Everett. (Eric Schucht / The Herald)

The Everett Clinic Founders Building on Wednesday, Nov. 23, 2022, in Everett. (Eric Schucht / The Herald)

Everett Clinic’s spat with Premera ‘lifts the curtain’ on price increases

When The Everett Clinic acquired Eastside, rates increased 50%, according to court filings.

EVERETT — The Everett Clinic’s dominant market share in Snohomish County allowed it to charge Premera — and patients — the highest rates in the state, according to legal filings in a case that recently came before the state Court of Appeals.

An opinion issued this month in The Everett Clinic’s favor says the clinic was also legally OK to start charging 50% higher rates when it acquired Eastside Family Medicine in the Bellevue area.

And it has at least one attorney, Emily Brice, wondering, “If the courts and insurance companies can’t stop price increases, then who can?”

The lawsuit, titled Everett Clinic v. Premera, “lifts the curtain on what’s behind some of the cost increases,” said Brice, senior attorney and policy advisor with Northwest Health Law Advocates. Higher negotiated rates can hit patients directly as coinsurance, and then can trickle down to higher premiums.

The case now goes back to King County Superior Court, where both parties have sued each other.

A spokesperson for Premera wrote: “We are disappointed in the Court of Appeals’ ruling and are evaluating our legal options. It is important to note that Premera’s goal is to provide access to quality and affordable healthcare for our members. When we negotiate contracts with healthcare providers, we do so as advocates for our customers’ dollars.”

The appellate court’s opinion lays out how the contracts between Premera and The Everett Clinic, and separately between Premera and Eastside, could allow such a 50% rate increase. According to the lawsuit, Premera offered to renegotiate the contract with Eastside, for a “blended rate” of the two contracts.

The Everett Clinic refused. Premera refused to pay the high rate. Premera also refused to pay a new rate when The Everett Clinic acquired Island Internal Medicine in 2020.

It was precisely the situation Premera had tried to avoid. Premera argued it intended the contract with The Everett Clinic to prevent it “from transferring the higher rates of reimbursement, necessitated by Snohomish County market forces, to smaller clinics outside that county.” But the judge ruled the contract language was too vague and thus inadequate.

In 2022, the state Senate considered the Keep Our Care Act that would have required a number of patient access protections related to health care mergers and acquisitions.

State Sen. June Robinson, who represents the 38th District, is a longtime patient herself at The Everett Clinic. She co-sponsored the Keep Our Care Act. After hearing about the court ruling, she said: “I am worried about how much health care is costing for the people of this state, the people I represent. And this case is yet another example of how health care consolidation is driving up costs. We don’t seem to have any tools, any regulatory tools, to stop it or control it.”

And when costs are too high, she added, people don’t access health care.

In this particular case, The Everett Clinic’s purchase of a small clinic could escape the study and review that was called for in last year’s proposed legislation. It included requirements for the state attorney general to periodically review the price impacts of large corporate health care mergers and acquisitions, and to study such transactions between insurers and providers. Even though The Everett Clinic is ultimately owned by UnitedHealth Group, which also owns health plans, the transaction was between providers, with the acquisition being likely too small for review.

This session, Robinson plans to sponsor a bill aiming to prohibit anti-competitive contracting between hospital providers and insurers. Specifically, she said it would prevent a hospital system from using its leverage in one community to require a carrier to contract with other hospitals and providers in its system. Right now, these large systems don’t have oversight in this area, Robinson said.

Premera failed to prove that the Everett Clinic was engaged in “unfair tying,” the appeals court ruled. This is when a supplier agrees to sell a product only if the buyer also buys a different (tied) product.

In response to a request for comment on the case, as well as allegations of monopolistic high pricing, a spokesperson for Optum said The Everett Clinic remains committed to quality care for its patients and current partnership with Premera.

“We are committed to our strong and long-term partnership with Premera and we have continued to work and collaborate with Premera on short- and long-term plans,” the spokesperson said. “Our priority and focus continues to be providing continuity of compassionate and quality care for our patients and communities we serve.”

Brice said that her organization supported the Keep Our Care Act, and would hope to see it reintroduced to improve health systems’ accountability and transparency.

“A couple years ago, one of the largest health care systems in the country bought The Everett Clinic. Optum is part of UnitedHealth, with billions of dollars in profit each year and billions more they have accumulated over time,” she said. “We’re not talking about a local practice anymore — we’re talking about a national corporation raising prices in our market.”

We will continue to report on access to health care in 2023. If you have faced barriers to accessing timely, convenient and/or affordable care in Snohomish County, please fill out this brief form: forms.gle/DcgfccCvwqVTh6Sk7

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.

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