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DPH letter prompts board to seek Blue Shield response on alleged underpayments to ZSFG trauma center
Summary
The Department of Public Health notified Blue Shield of alleged underpayments to Zuckerberg San Francisco General's trauma center; Blue Shield apologized for not acknowledging the May 26 letter, said the matter is with its network-contracting team and cited reasonable-and-customary payment methodology; the board asked Blue Shield to report back to DPH and the board at the next meeting.
Commissioner Sanchez brought a Department of Public Health (DPH) letter dated May 26 that reported substantial underpayments by Blue Shield to Zuckerberg San Francisco General Hospital’s trauma center and asked Blue Shield to respond. DPH said the trauma center’s charges for 2016 totaled roughly $24.5 million for the Blue Shield patients referenced; after processing and what DPH characterized as underpayment, the hospital faced a significant revenue shortfall that could increase the city’s general-fund subsidy.
Paul Brown, Area Vice President for Account Management at Blue Shield, apologized for the lack of a timely reply and said the correspondence had been triaged to Blue Shield’s network-contracting team and that he would ensure a substantive response: “For that lack of response, I apologize on behalf of Blue Shield and we will circle back with the appropriate people internally to make sure we do just that and respond.”
Blue Shield and board members discussed how nonparticipating-provider claims are paid. Blue Shield explained that reimbursement for out-of-network services is based on reasonable-and-customary (R&C) schedules that reflect charge-to-cost ratios and that the Office of Statewide Health Planning and Development informs those calculations. Commissioners and DPH representatives said level‑1 trauma-center services have unique cost structures and urged Blue Shield to treat the matter with urgency to avoid shifting costs to city taxpayers.
Diana Guevara, associate administrator for patient finance and the Office of Managed Care at DPH, told the board Zuckerberg San Francisco General provides the city’s only level‑1 trauma service and recovers only a portion of its costs because of its disproportionate share of low-income and Medi‑Cal patients; she said the city depends on fair commercial reimbursements and hoped the parties could reach a remedial agreement.
What’s next: Blue Shield committed to respond to DPH and provide an update to HSS at the next meeting. Commissioners asked staff (via Executive Director Griggs) to track negotiations and inform the board of progress.
