Stanford Health Care Terminates Anthem Blue Cross Contract

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 had reached agreement on a two-year contract. But Stanford seeks a third year; Anthem does not. The two parties could not come to terms as of Friday, so there is no new contract.

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."

Morgan also 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.

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.

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.

Indeed, there is an entry in PriceCheck for a $5,647 lower back MRI at Stanford. This appears to be the chargemaster price, as the person who uploaded the information noted that the rate paid by the insurer (in this case, Aetna) was $2925.15. Here's a screenshot of the entry:

It's unclear if the termination will truly come to pass. "This will almost certainly be resolved by Sunday," Larkin told the San Jose Mercury News.

Long and fraught negotiations between major hospitals and giant insurance companies are common. Stanford terminated its contract with Anthem in 2011, and Larkin told State of Health that Stanford was "three months out of contract" with significant disruptions to patients at that time.

Lucille Packard Children's Hospital is not affected. Anthem and Stanford Health Care had previously reached agreement on a two-year deal.