Sutter Health seeks to prevent self-insured companies from suing over prices

Sacramento, California-based Sutter Health is being accused of strong-arming companies into waiving their rights to sue the 24-hospital system, according to KQED.

Companies that contract with Sutter through insurance administrators have reportedly received letters saying if they don’t agree to mandatory arbitration, Sutter won’t offer them in-network rates. The system is the largest in North California, controlling about 30 percent of the market and, according to the University of Southern California, its prices are already 25 percent higher than other hospitals in the state.

“Having a very strong, dominant provider system will reduce choice for our employees," Jennifer Chaloemtiarana, general counsel for San Francisco tech company Castlight Health, said to KQED. "We want them, over the long term, to have choices in high-quality, low-cost providers."

Castlight is a self-insured company that uses Anthem Blue Cross as an administrator of its health plans. Chaloemtiarana said, since it pays for its employees’ claims, the company has serious concerns about not being able to challenge Sutter’s rates in court if necessary.

Those self-insured companies have until mid-November to agree to the deal, which Sutter defended by saying companies "can't accept deep discounts and make up their own rules."

For more on Sutter’s defense and what may have motivated the system to take this step, click on the link below: