The Fresno City Council on Thursday made the first moves to create a new health care plan for its workers and families after failed negotiations between Community Health Systems and Blue Shield of California left thousands with only out-of-network coverage.

On Feb. 1, more than 12,000 subscribers on the city’s health care plan lost in-network coverage to Community Health Systems, the largest health care provider in the area. Council President Mike Karbassi said negotiations between the insurer and the provider have stopped, ending continuity of care for city workers and their families.

Since then, health care access at Community has been considered out-of-network, with workers possibly paying extremely high premiums for treatments and procedures.

One solution to preserve continuity of care could be for the City Health and Welfare Trust Board — the body that oversees the health plan — to negotiate directly with Community.

Councilmembers on Thursday agreed to provide up to $50,000 to the board in case creating a new plan creates legal trouble.

While negotiating a new plan would be weeks away at the earliest — according to a member of the board — Karbassi said at a news conference he hopes the threat will bring Blue Shield and Community back to the negotiating table.

“When our residents lose their ability to have in-network care, you’re talking about double or more in cost for their normal care,” Karbassi said. “They’re already entitled to that. They shouldn’t be subject to the squabbles of this insurance provider not being able to work with Community Health Systems.”

Community, Blue Shield Respond

City Councilmember Nelson Esparza said he wanted the board to look into a Kaiser Health Plan option.

“I don’t know what the Health and Welfare Trust Board will do, but… the city council is prepared to back them up financially and whatever it takes to restore access,” Esparza said.

Releasing a previous statement, Blue Shield told GV Wire that negotiations had been going for months before the lapse in the coverage. The insurance company said Community was not willing to budge on payments tied to performance. Enrollees still have access to Saint Agnes Medical Center and Valley Children’s Hospital.

“We know families and our customers are frustrated by the rising cost of health care – and they want to see solutions, not just explanations,” the company said in the statement. “We are willing to work with CMC to come to a solution that balances our shared responsibilities to provide access to quality, affordable care in San Joaquin Valley and throughout California.”

In a statement to GV Wire, Aldo De La Torre, division president of insurance services and managed care with Community, said persistent drug price increases, supply prices, and the “unfavorable” and “uncertain” impacts of the federal reconciliation bill affect hospital prices. De La Torre said they are willing to negotiate with Blue Shield.

“Community is asking Blue Shield to commit to reimbursement rates akin to what our contracted payors pay. This helps ensure financial stability for Community and creates a level playing field in the market,” De La Torre said. “Otherwise, Blue Shield has an advantage over other health plans and that serve to widen the gap between the cost for providing care and what we are reimbursed for it.”

Reimbursement Guarantees Would Help Patients: Frank

The council’s resolution protects the Health and Welfare Trust Board in case someone sues for creating the plan, said Sam Frank, business manager for the Fresno City Employees Association, who also sits on the board.

“It makes it easier for us to look at other options without that hammer of possibly getting sued,” Frank told GV Wire. The board will have to consider what rates a new plan could get for enrollees and what it would cost the trust.

Contract negotiations can take time. When Blue Cross and Community couldn’t reach a deal in 2023, that stalemate lasted for six months, Frank said. The next meeting for the board is March 11.

What insurers and providers could do for enrollees in the meantime is guarantee reimbursement coverage, he said. In 2023, Blue Cross told enrollees that they would be reimbursed for out-of-network premiums.

“If they will at least say that, now at least our people who are paying a higher rate will know that once it’s under contract, they’ll get that money back,” Frank told GV Wire.

State Needs Requirements for Carriers, Providers Before Insurance Lapses: Frank

City Councilmember Annalisa Perea — who coauthored the resolution — said city workers are caught in the negotiations.

“Resolve this now,” Perea said. “When health care becomes leverage in a negotiation, patients always pay the price, and that is a price our community should never have to bear.”

Frank said that union groups will soon begin lobbying to craft rules about what providers and insurers have to do before coverage lapses.

While insurance companies say that other providers such as Saint Agnes are available, those don’t come with referrals, he said. Patients dealing with serious conditions have to often change their care or their specialists.

For those that want to keep their doctor, they don’t even know what out-of-network costs will be until the bill comes, he said.

“That’s a state law, but it does need to be changed,” Frank said. “It does need to put the onus on the service providers and on the insurance carriers that they work together to find out who gets continuity of care and give to them automatically and not make (patients) do all the legwork. Because how do you do that at the last minute?”