Stanford Ends Anthem Contract, Cites PriceCheck Data

September 13, 2014
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Summary: Price transparency has some unexpected consequences. Stanford, the big university-centered health system, cut off its contract with Anthem Blue Cross, the big California insurer, on September 5. Anthem struck back at Stanford, announcing that Stanford had ended the contract, and citing our PriceCheck information in its press release.

We are often asked what the effects of transparency are.

Here’s a quick example: When price information that had previously been hidden from view comes into sight, surprising things happen.

For example, what happens when insurers and providers are confronted with the fact that a provider or providers are claiming high reimbursement rates, rates an insurer feels are higher than what others are charging?

We’re not sure exactly what happened in the Stanford-Anthem contract negotiations, but Lisa Aliferis, editor of State of Health, at our partner KQED public radio in San Francisco, wrote this blog post:

“Stanford Hospital and Clinics — now known as Stanford Health Care — is ending its contract with Anthem Blue Cross effective Sunday night at midnight. The move could affect 10,000 patients.

“According to both Stanford and Anthem spokespersons the two sides have reached agreement on a two-year contract. But Stanford seeks a third year, and the two parties could not come to terms as of Friday.

“Stanford said the current contract ends Sunday, and since they do not have a deal for a new contract, they opted to terminate.

“But, Anthem sees the termination of the contract as unnecessary. “Nothing compels (Stanford) to terminate on Sunday night,” said Anthem spokesman Darrel Ng.

“In a letter sent Friday to Stanford Health Care president Amir Dan Rubin, Anthem’s president Mark Morgan wrote:

“I respectfully request that Stanford Health Care rescind its contract termination so that our members can have uninterrupted care. We have already agreed on terms for the next two years, and it would be unfortunate to subject our members to any disruption in their care during prolonged negotiations.”

“Stanford spokesman James Larkin insisted there would “be no impact on Anthem’s patients” treated at Stanford, and that Anthem patients would continue to pay in-network rates.

“But that statement is in conflict with Morgan’s letter. Morgan wrote that if Stanford moves forward with termination of its contract, “Anthem members will be liable for chargemaster rates.” Chargemaster rates are essentially the list price, usually multiples higher than what insurers pay to providers.

“While Morgan acknowledged that Stanford “does provide excellent care,” he also noted that Stanford is “one of the most expensive hospitals in the state.”

“In his letter, Morgan cited data from KQED’s PriceCheck project where patients can share health care costs they have paid and that their insurers have paid. Morgan noted:

According to KQED’s Price Check tool, a lower back MRI (72158 MRI-Lower back/lumbar spine w/ and w/o contrast) cost $5,647 at Stanford, which is nearly eight times what an imaging center in nearby San Jose charges at $724. 

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The message Anthem is sending suggests that patients will be hurt because if they want to see a Stanford doctor, they will now be paying out-of-network rates, which indeed we are told in PriceCheck are $5,647 for that particular MRI. You can search at this page to see the results of our survey data for cash or self-pay rates for MRI’s and other prices, juxtaposed with our crowdsourced data (labeled “crowdsourced”).