CaliforniaCare Health Plans, an affiliate of Blue Cross of California, said it has completed re-contracting with more than 300 hospitals in a program designed to develop long-term partnerships based on quality data and favorable reimbursement rates.
However, the process is not complete, and negotiations with several major healthcare systems in the state are continuing.
Based on their response to a request for proposal, 269 hospitals were designated as "Tier I" facilities and 59 were named "Tier II" facilities.
A spokeswoman for CaliforniaCare said discussions are continuing with 47 hospitals, many of them part of large, multihospital chains, including Scripps Hospitals, Sharp HealthCare and Sutter Health. All the two-year contracts are expected to be signed in the next few months, she said.
Tier I hospitals will be given preferred status and will be eligible for joint long-term programs, including marketing, electronic interfacing, quality and outcomes support, and simplified utilization management.
In addition, patients treated in Tier I hospitals will be covered by superior benefits. Many patients in Tier II hospitals will be subject to higher copayments.
The program was designed to respond to "the increasing pressures of the marketplace," said Max Brown, senior vice president of network development and management. "Purchasers and members look to the industry to reduce healthcare costs and demonstrate the quality and stability of the provider networks with which they contract."
Hospitals were taken aback when the program was announced in July 1995; several contended it was a pricing strategy that had nothing to do with quality (July 10, 1995, p. 3).
In a written statement issued last month, CaliforniaCare said: "The tiering designation is not a quality-of-care distinction. The basis of their designation is the relativity of their proposed rates to other hospitals in their peer category, the extent of the change in their proposed rates from their historical rates, and the presence of other comparable hospitals in the same service area."