Negotiations to decide insurance status of Alaska patients of Providence affiliates

By: Andrew Kitchenman, Alaska Beacon

(Photo by Valeriya/Getty Images Plus)

Three health care provider groups with Alaska’s largest hospital have notified the state’s largest insurer that they are terminating their contracts at year’s end. 

Premera Blue Cross Blue Shield of Alaska posted a notice on its website dated Nov. 16 saying the medical, behavioral health and imaging groups of Providence Health & Services Alaska in Anchorage and Palmer are ending their contracts on Dec. 31. The notice does not affect patients of Providence Alaska Medical Center itself, which remains under contract with Premera.

Ending the Providence groups’ status inside Premera’s network could affect which providers patients can see and how much they pay. Both Providence and Premera have said they continue to negotiate over a new contract, and remain hopeful they will head off the changes. 

The doctors and others in the groups provide primary care, behavioral health, maternal-fetal medicine, palliative care and several pediatric specialties, including gastroenterology and neurodevelopment.

In an emailed statement, a Providence spokesperson said the end of the contracts would not affect patients’ ability to receive in-network care at Providence hospitals. 

Both sides cited the rising costs of providing health care as reasons for their positions.

Providence spokesperson Mikal Canfield said that what Providence must pay for supplies, pharmaceuticals and labor grew by more than double-digit percentages between 2020 and 2022 and have continued to rise.

“Reimbursement from insurance companies and revenue have not kept pace with these increased costs,” Canfield said. 

In its posted notice, Premera said it has been working in good faith to reach an agreement by Dec. 31 that “provides quality care for our members and fairly compensates” the providers.

“Significant rate increases, untethered to improvements in quality or access to care, work against our objective of making healthcare work better,” the Premera announcement said.

Premera Senior Vice President Jim Grazko emphasized that Premera and Providence continue to have what he described as a “strong” relationship. He added that there has been a national trend of provider groups notifying insurers during negotiations that they planned to leave their networks.

“The hospital will continue to be contracted and, hopefully, with a little bit further negotiation — and we’re getting close — all three of those medical groups that issued the termination letters to us, unfortunately, will be back,” he said.

Dr. John Morris expressed concern about the effect of the dispute, when combined with an upcoming change in Alaska. State insurance regulators are ending a 20-year-old rule setting the minimum amount insurance must pay out-of-network providers. Without the rule, Morris expects insurers will offer less to providers to stay in their networks, knowing they won’t have to pay as much if the providers are out of network. 

Morris chairs the Coalition for Reliable Medical Access, which along with other provider groups, sued the state to block the end of the rule. Morris, who is part of an anesthesiology practice, does not work at Providence.

“It’s going to all result in a reduction in access and in an increase in out-of-pocket costs for people,” he said. “That’s the whole thing.”

Grazko said that in the absence of the state rule, insurance-provider negotiations would proceed like they do in other states, and that Premera continues to want to keep providers like Providence in its network regardless of the rule change.

“They would get paid less” if they leave the network, Grazko said. “The goal is to keep them in contract at fair rates.”

State officials have said research shows that the rule they’re planning to repeal puts upward pressure on health care spending. Alaska has some of the highest health care costs in the world.