In Brief: Sutter Leans On Employer Groups To Accept Arbitration Clause; Hospitals Give $8.5 Million For Ballot Initiativeill

Sutter Leans On Employer Groups To Agree To Arbitration Clause

Sacramento-based hospital operator Sutter Health is pressuring its employer groups to accept arbitration to resolve any contractual disputes.

According to California HealthLine, which first reported on Sutter’s move, those groups that reject arbitration must accept out-of-network rates at Sutter facilities that are at 95% of costs -- far higher than if they agree to an arbitration clause. Sutter has among the highest non-discount charges for hospital services in California, according to a variety of sources.

David Lansky, chief executive officer of the Pacific Business Group on Health, said the ultimatum being made by Sutter is intended to exclude employer groups from an ongoing class-action lawsuit that accuses the hospital chain of inflated prices and anticompetitive business practices.

“Their choice is between two unacceptable alternatives: Pay 95% percent out-of-network pricing for enrollees that access Sutter services or agree to give up their claims in this litigation,” Lansky told California HealthLine.

However, Sutter officials have said that the arbitration clause would not exclude self-insured employer groups from joining the class action lawsuit.

Sutter’s move has left California’s payer community divided. Aetna and Anthem Blue Cross has urged its employer groups -- for which they often act as a third-party administrator -- to accept arbitration. Blue Shield of California is opposed to the move, according to California HealthLine.

Hospitals Give $8.5 Million For Ballot Initiative

The California Hospital Association’s umbrella organization has contributed $8.5 million toward a planned November ballot initiative that would extend a tax on the wealthy for more than a decade.

The initiative, if it reaches the ballot, would extend the taxes on Proposition 30 by another 12 years if it is approved by voters.

The revenue would go to education, healthcare and mental health services funding.

Proposition 30 was passed by voters in 2012 by an 11-point margin. It included a small sales tax hike, but also additional taxes on households in California earning more than $250,000. The tax became higher up to those households earning more than $1 million a year. Those tax increases are to be in effect through 2019.

Proposition 30 is estimated to have raised about $6 billion annually in recent years. An extension is expected to collect between $6 billion and $11 billion a year, depending on a variety of factors.

The contribution made by the California Association of Hospitals and Health Systems late last month far exceeds the $2 million it gave to the Proposition 30 campaign four years ago, records show.

An intiative to extend the state tax would need the signatures of about 585,000 registered voters in order to qualify for the ballot. About a quarter of those signatures were gathered as of early March. No polling on whether voters support an extension on the tax is currently available.