How rising insurance costs cut patient choice

I recently received an email from a physician owner of a local ambulatory surgery center, Surgery Center of Silverdale. He was frustrated with the health insurance side of medical care and was hoping I might feel the same way. He was candid about his reason for reaching out: the center has reached a stalemate in negotiations with Premera Health Insurance and he was asking for help. He seemed to think that my column might make a difference in explaining the pressure now faced by independent physicians, which means he believes those reading it can bring about change. I hope he is right.

Surgery Center Silverdale (SCS) is one of three surgery centers in Kitsap County. It is 70% physician owned, making it one of the last independently owned and operated facilities in our community, just like my pediatrics clinic. Since 2017, Premera had a contract with SCS to cover outpatient surgeries. Unfortunately, according to the doctor who spoke to me, when negotiations began in 2023 Premera focused on one thing: reducing the amount physicians are paid to operate on patients — in fact, to pay them less than the cost of performing the surgeries altogether.

By now, you know what happens next. No clinic or surgery center can survive in the long term if they cannot be paid for the services they provide. And I am not saying that SCS has reached that point. But every private medical clinic is slowly being pushed closer to the edge of the cliff. Reduced insurance reimbursement wreaks havoc on patients, physicians, and hospitals alike. As a result, our local healthcare infrastructure is slowly collapsing. The last clinic to close its doors was Kitsap Children’s Clinic, the oldest, busiest, and probably most beloved private practice on the peninsula. That loss still reverberates today: affecting patients, parents, and the primary care physicians left picking up the pieces.

Without a contract, SCS is considered “out-of-network” for Premera subscribers. When a facility is considered out of network, patients pay substantially higher out-of-pocket costs for their care at that location. SCS is the only local facility performing certain eye operations — retinal procedures or corneal transplants — outside of the hospital. If a patient has Premera coverage, they have three choices: have the operation at St. Michael Medical Center at what can be between two to 10 times the amount, pay more outof-pocket to have it done at SCS, or travel to Seattle for the same operation, which requires either a long drive on the highway or a ferry ride. This limitation is bad for patients and doctors.

Why is Premera unwilling to negotiate with SCS? They don’t have to. And no one can make them. It is the free market illusion in healthcare. They are the largest health plan in the Pacific Northwest, serving more than 2.6 million people. Premera holds all the cards.

Studies have overwhelmingly shown that costs are higher in a hospital than the same operation at an ambulatory surgery center. Why isn’t Premera interested in saving money? Why are they willing to pay up to 10 times the price for operations that could be done down the street for far less? Because Premera is in the advantageous position to charge you whatever they want. And you have no choice but to pay it.

Think about it this way: You have Premera insurance and in 2023 you had an operation. You already pay a monthly premium, so Premera covered that service. Now, in 2024, because you and a few thousand others had your operation the year before at the more expensive price point, the overall costs to the insurer ballooned. Premera then has justification to charge everyone more for that same coverage, keeping profits exactly where they want. And they do. Premera’s small group plan increased their premiums by 17% in 2024. Is it any wonder?

I was once in the same position where Surgery Center of Silverdale is now. In 2014, there were several health insurance plans offered on the marketplace that refused to contract with any physician on staff or affiliated with Seattle Children’s Hospital. They “blacklisted” all of us in rural communities, the very place where marketplace plans were supposed to help. Believing my affiliation with Seattle Children’s Hospital helped me provide the best care I could for children in this community, I refused to compromise. In the end, it was my patients who forced the insurance companies to the negotiation table.

So, I am asking you to do that now. If you have Premera coverage, then you are paying more for health insurance than you were last year. How do you want to spend your hard-earned money? First, complain as loudly as you can to Premera. Unfortunately that’s unlikely to make a bit of difference. In my opinion, as long as the money keeps rolling in, Premera doesn’t see those 2.6 million subscribers as anything more than chattel.

Next, contact your state representatives and senators in the Legislature and ask them to hold Premera accountable for their predatory financial tactics. Then email, call or write to the state Office of the Insurance Commissioner, Mike Kriedler, and ask for their help.

Premera is essentially controlling the flow of patients — not only where they go for care, but also choosing which operations are performed, who performs them, and how much you pay for it. Patients deserve choice. Don’t let corporate America take it from you.