A group of companies is suing Sutter Health, a nonprofit network of hospitals, clinics, and doctors in northern California, accusing it of anticompetitive practices and price gouging.
The suit, which a number of major private and public sector employers have signed onto, specifically targets an agreement that Sutter has asked employers that wish to include it in their employee health plan networks to sign.
Employers that sign agree that any dispute with Sutter will be resolved via arbitration, rather than the court system. Those that refuse to sign are not excluded from Sutter’s network, but they are forced to pay 95 percent of the out-of-network cost for any medical services obtained through Sutter.
Only a network with overwhelming market share could impose such a draconian agreement, the plaintiffs argue. To support their claim, they point to what they say are exceedingly high prices even for Sutter’s in-network customers. They claim, for instance, that staying overnight at a Sutter hospital in Sacramento or San Francisco costs 38 percent more than in Los Angeles.
Health insurers have taken different stands on the issue. NPR reports that Anthem and Aetna have shrugged, advising their member employers to sign the agreements, while Blue Cross Blue Shield of California has signaled its support for the lawsuit against Sutter.
Sutter has defended itself, saying that preventing costly legal battles is one of the ways it can afford to offer patients discounted prices.
“If self-funded payers wish to access the discounted rates that Sutter Health makes available under these contracts, it is reasonable to ask that they abide by the package of terms that make those rates financially feasible,” Sutter spokesman Bill Gleeson told NPR. “They should not be able to cherry pick which provisions apply to them and which do not.”