California Officials Crack Down on Blue Cross

LOS ANGELES (AP) - State regulators ordered Blue Cross of California to stop requiring doctors and hospitals to sign a secrecy agreement before they can negotiate with the state's largest health plan.

The confidentiality requirement represents an "unlawful and unfair business practice" and threatens the ability of some hospitals to provide health care, the Department of Managed Health Care said in a cease-and-desist order issued Thursday.

Blue Cross of California, a subsidiary of Indianapolis-based WellPoint, Inc., has about 4.2 million California enrollees, according to regulators.

This year, Blue Cross began requiring that doctors, medical centers and laboratories who want to sign with the health plan or renew their contracts must first agree not to reveal any information about the negotiations.

The agreement also applies to consultants and attorneys hired to advise the hospitals.

State regulators said Blue Cross has threatened that it will not negotiate with any doctor or hospital that refuses to sign.

Sixteen hospitals have Blue Cross contracts that are set to expire by the end of the year. About 700,000 Blue Cross patients could be affected if they are not renewed.

"In the case of hospitals, particularly rural stand-alone hospitals, the threat of loss of Blue Cross contracts and Blue Cross patients presents a serious financial hardship and threatens those hospitals' ability to provide critical care and access to care." the cease-and-desist order said.

WellPoint spokeswoman Shannon Troughton defended the confidentiality agreement, saying it provides "protection of confidential information and bars consultants from sharing Blue Cross data with other providers and competitors."

(Copyright 2007 by The Associated Press. All Rights Reserved.)