California regulators halt plan's confidentiality agreements

Physicians remain concerned because the order does not apply retroactively. Blue Cross says it will revise the contracting requirement.

By Amy Lynn Sorrel, AMNews staff. Dec. 3, 2007.

California insurance regulators ordered the state Blues to stop using "confidentiality agreements" they said deprive physicians and hospitals of their rights to fair representation during contract negotiations. But doctors worry the cease-and-desist order the state Dept. of Managed Health Care issued Nov. 1 does not go far enough.

The mandatory agreements had given Blue Cross of California "sole and absolute discretion" as to whether doctors could use an attorney or consultant during contract discussions. Doctors and their representatives had to sign the document before negotiations began. The provisions also required that "any confidential information" generated during the process be returned to Blue Cross.

The California Medical Assn. reported the issue to the state in February, as did the California Hospital Assn. Doctors said the unprecedented tactic violates state laws governing attorney-client privilege and fair business practices.

Regulators agreed.

"The agreement is permeated with Blue Cross' interference with the [physician-consultant and physician-attorney] relationship," the order reads. "A physician or hospital's freedom to choose their negotiating representatives is a critical facet of fair and reasonable negotiations and, thus, of fair and reasonable contracts."

The insurance department also found that Blue Cross' definition of confidential materials was "overbroad" and "ambiguous," keeping doctors from bargaining effectively.

Echoing concerns from the medical community, agency spokeswoman Lynne Randolph said the Blue Cross "take-it-or-leave-it" approach could compromise access to care.