UC, Blue Shield near contract deadline for CA patients, including some state workers
The University of California Health system is approaching the deadline to reach a contract with Blue Shield of California, to keep care in-network for a large group of patients, including many state workers.
Some patients received notices that their UC providers may go out-of-network, should the health system and insurer fail to reach a deal. Both parties said they are continuing to negotiate, and want to reach a new agreement before the current contract expires on June 30.
For UC Davis Health alone, 35,000 people would be affected, said hospital spokesperson Steve Telliano.
The dispute comes as Sutter Health and Aetna endeavor to reach a new contract for hundreds of Sacramento-area patients, facing the same, end-of-June deadline.
Health insurers and hospital systems are in near-constant negotiations for contracts that cover different groups of patients. But in most cases, they reach agreements behind closed doors. Occasionally, when a contract deadline draws especially close, patients receive letters notifying them that their doctors and specialists may soon be out-of-network, should the groups fail to reach a deal in time.
Experts say insurers and hospitals usually end up reaching an agreement in such cases. But in the meantime, patients are left to worry that major disruptions to their medical care may be mere weeks away.
The California Public Employees’ Retirement System estimates the contract affects around 35,000 of its members, according to Eric Sweigert, an information officer for the pension fund.
“Unfortunately, it’s the members that get caught in the middle,” said JJ Jelincic, director of health benefits at the Retired Public Employees’ Association of California.
Jelincic said members have been contacting the association, wondering whether their doctors will soon go out-of-network, and whether Blue Shield and the UC system are likely to reach an agreement.
Jelincic said based on history, it seems likely that they will reach a deal. But patients are still left with plenty of anxiety.
“Because it’s their health care, people are concerned,” Jelincic said. “The only thing they really know is, there’s a dispute… Nobody knows whether they’re 20% apart or 1% apart.”
As stressful as such situations are for patients, experts say they may be more common now, because there are economic pressures on both hospitals and insurers to drive a hard bargain.
Over the past few years, inflation drove up hospitals’ costs. Insurers are seeing more patients using medical care than expected. And employers are likely more sensitive to big premium increases, due to recession fears and general economic uncertainty.
“I don’t have a sense of whether this is a wave of disputes,” said Paul Ginsburg, a senior scholar at the University of Southern California’s Schaeffer Institute who has researched “showdowns” between hospitals and insurers. But, he added, “I wouldn’t be surprised if it was.”
Blue Shield of California said it will continue to negotiate with the UC Health system. The insurer said it wants to reach a deal that keeps UC Health providers in-network at reasonable, sustainable prices.
In a statement, UC Davis Health said the health system is “deeply disappointed in Blue Shield of California’s negotiating approach,” and said it, too, was committed to continued negotiations.
Telliano, the hospital spokesperson, said many people who have Blue Shield of California would be affected, but there are exceptions. UC Davis’ website said the contract includes a range of plans, from some patients who have Blue Shield of California coverage through CalPERS, employer-sponsored plans and the marketplace. If a patient is uncertain, Telliano suggested calling the number on their insurance card.
More information about which health plans are affected, and how, is available online from UC Davis Health, CalPERS and Blue Shield of California.
“We certainly understand this causes a lot of anxiety for patients,” Telliano said. “We’re doing all we can to try to reach an agreement.”
This story was originally published May 23, 2025 at 2:57 PM with the headline "UC, Blue Shield near contract deadline for CA patients, including some state workers."
