Providence ends contract with Premera, rocks state's health care industry

SEATTLE -- Shock waves were sent through the state's health care industry Wednesday as a contract spat has led to a split between Providence Health & Services and Premera Blue Cross.

Providence announced they will not be renewing their contracts with all of Premera's plans in Washington, effective Jan. 1, 2017. The move means that all of Providence, Swedish, Kadlec and PacMed facilities, plus their physicians and clinics will be considered out-of-network for Premera customers. That includes Puget Sound facilities like all Swedish Medical Centers in King County, Providence Medical Center in Everett, and St. Peter Hospital in Olympia. (See full list:)

Providence said sticking points were rates, standard contracting terms across the system, "and the development of a quality incentive program that aligns our work with the goals established at the state and federal level for advancing high quality, accessible health care."

"We are disappointed we were unable to come to terms with Premera, but this does not mean it isn't possible for Providence to develop a new contract with Premera in the future," Providence Health & Services said in a statement announcing the contract termination. "We are communicating about this decision now to ensure our patients can make the best choice about their health care plans for 2017."

Premera countered that others they have contracted with "have committed to more aggressively control costs, improve the quality of care with performance-based payments, and enhance the patient experience."

Premera Blue Cross spokesperson Steve Kipp said: "We will continue to work with providers, on our customers' behalf, to ensure that customers have access to high-quality, high-value healthcare in their community after December 31, 2016. In the meantime, we remain open to working with Providence on a new contract, if they are willing to meet the needs of our customers."

Both groups say Premera patients will continue to be considered "in-network" for care received at Providence facilities and clinics through Dec. 31, 2016.

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