Swedish threatens to end Regence BlueShield's contract

The largest hospital system in the Puget Sound area is threatening to end its contract with the state's largest health insurer unless it receives higher payments for medical services.

The dispute between Swedish Medical Center and Regence BlueShield could reduce coverage for thousands of patients if Swedish terminates the contract and becomes an out-of-network provider for Regence members.

The two sides have been embroiled in tough negotiations over payments for months. On Nov. 6, Swedish filed for summary judgment in King County Superior Court seeking $20 million from Regence for what it contends were underpayments for cancer treatments and other services.

Once Swedish gives Regence a formal notification — something it hasn't yet done — the two sides would have 120 days before the contract is terminated. In 2007, Swedish also threatened to sever its contract with UnitedHealthcare, a major national health insurer, over reimbursement rates before reaching an agreement.

Swedish contends that Regence pays significantly less than other commercial insurers while Regence counters that Swedish's charges are substantially higher than for its peers in the region.

According to Regence, Swedish is seeking rate increases totaling 32 percent over three years. That's nearly double the rate increases that it has received in recent years and more than the rate of health-care inflation, said Rachelle Cunningham, a spokeswoman for Regence.

Beth Johnson, a Regence vice president, said the amount of rate increases for Swedish would directly lead to higher premiums for Regence customers.

The dispute "is about the cost of health care and needing to rein in that cost," Johnson said. "We have to be good stewards" of premium dollars.

In a statement, Swedish said terminating the contract would be a last resort and objected to Regence going public with the dispute Thursday.

"It is a blatant attempt to scare patients. Swedish leaders believe this dispute can be resolved equitably, but only if Regence agrees to meet the medical center at least halfway," the statement said.

Last December, Swedish filed suit against Regence, alleging that the insurer underpaid for certain outpatient hospital procedures.

Ed Boyle, a spokesman for Swedish, said that most, but not all, of the dispute involved payments for intravenous infusion of chemotherapy for many types of cancers.

Regence has "been unwilling to adhere to the contract and that simply can't continue," Boyle said.

Kyung Song: 206-464-2423 or ksong@seattletimes.com