Buyout Puts Insurer at Odds With Monarch


In an unexpected move, Blue Shield of California confirmed it will no longer do business with Irvine’s Monarch HealthCare if its pending merger is finalized, which could affect 19,000 Orange County residents.


As long as Blue Shield’s agreement is in place, members should continue to have access to their Monarch physicians, said Juan Davila, Blue Shield’s senior vice president for network management, in a statement.


Though the current contract remains in force, if Blue Shield terminates its Monarch contract, members will be notified and an orderly transition take place, said Blue Shield spokesman Johnny Wong, disputing that any members, including seniors, will be forced to make a hasty decision over their health-care provider because of the disagreement.


In a posting this week under the heading “Don’t Lose Your Doctor,” Monarch’s website suggests Blue Cross-insured patients should select among five alternate insurers that also contract with Monarch for services in order to maintain their current physician.


About 2,400 seniors as well as 17,000 other Monarch patients buy individual and group health insurance policies from Blue Shield, according to a Monarch spokesman, who declined to be identified.


Patrick Freeman, of Laguna Beach, an broker who specializes in Medicare “advantage” plans relied on most local seniors, thinks Blue Shield members need to act swiftly. Medicare’s annual open-enrollment period, when recipients can switch health-care plans and select a new insurer, ends Dec. 7.


While the Blue Shield spokesman disputes that seniors need to act immediately, Freeman says its clients need to switch insurers or be forced to find a new doctor unaffiliated with Monarch, which will be difficult in south-county. Monarch is the dominant physician group with 2,300 physicians in a range of specialties.


At this point, it remains unclear whether consumers’ health-care preferences really are affected by the dispute between the non-for-profit Blue Shield and its for profit rival, UnitedHealth Group Inc.


Monarch’s pending buyout by UnitedHealth creates a conflict of interest that will inevitably put other providers at a competitive disadvantage, said Blue Shield’s Davila.


“Blue Shield is committed to relationships with providers that share our mission of expanding access to affordable health care for all Californians,” said Davila, describing arrangements with physicians and hospitals to achieve that goal, control health-care costs and a pledge to return savings to members.


By contrast, “UnitedHealth has a track record of aggressively seeking maximum value for its shareholders,” Davila said, an approach inconsistent with reducing costs or returning savings to customers.


Monarch’s spokesman described the deal differently. “The partnership is being done because we think it will improve care to our patients,” he said, though offering no specifics.


Freeman’s senior customers, though, are generally less concerned about their insurers than with their strong ties to physicians. “Their doctor is part of their family, said Freeman, who this week distributed information about alternate health-care insurers to nine Monarch doctors in Laguna Beach and Laguna Niguel. Doctors told him they were informed of an expected contract change with Blue Shield members in an email from Monarch executives last week.


“Changing plans is a big deal; not just like changing your shoes,” said Freeman, who typically recommends three alternatives to seniors based on their individual financial and health circumstances. “It’s a big process for small companies too,” he said, involving several months of negotiating for the best rate based on the age and claim history of employees.


Monarch’s deal with United Healthgroup’s Optum division is due to close this week or next, said the Monarch spokesman, joining a major insurer with a major physician group. Optum had previously taken over the management arms of two smaller southern California doctor groups.


Freeman had a different sense of the contract dispute. He suggested Blue Shield executives had concerns its proprietary information would be available to Monarch’s parent company, UnitedHealth, Freeman said he was told by a Monarch executive.


When insurers negotiate terms with doctor groups, they share proprietary cost information to establish the fairness of reimbursement rates, Freeman explained. If that information was disclosed, a competitor could better compete for contracts and weaken its rival, he said.


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