Ellie Van Houtte/Town Crier Palo Alto Medical Foundation, which has offices at 370 Distel Circle in Los Altos, warns patients of upcoming health coverage changes in the wake of a contract dispute between Blue Shield and Sutter Health.

Local residents who are insured by Blue Shield and rely on Palo Alto Medical Foundation (PAMF) for medical services may be in for a surprise this year.

Blue Shield has announced that it could not come to terms on a new contract with Sutter Health PAMFs parent company by Dec. 31, according to a Santa Cruz Sentinel report last week.

Barring a change in negotiations, people insured by Blue Shield may need to switch doctors and will likely incur some additional out-of-pocket costs for services provided by PAMF and other Sutter Health affiliates, Blue Shield of California representative Lindy Wagner wrote in an email to the Town Crier.

We are continuing our discussions with Sutter with the goal of negotiating a new contract that will allow us to provide our customers affordable access to Sutter providers under fair and reasonable terms, Wagner noted. In the meantime, Blue Shield has taken steps to ensure members will continue to have uninterrupted access to quality medical care, and we are working with our members, brokers and employer groups to ensure a smooth transition to alternate providers.

Wagner said a transition period is in place for Blue Shield members. HMO members can continue receiving Sutter Health services through March 31. Those members, who will be notified of the change later this month, will be reassigned to a new health provider April 1.

EPO and PPO members will be able to receive in-network benefits for Sutter Health services during a six-month transition period (through June 30) with a caveat.

However, during this period, while members percentage cost-share will stay the same, Sutters charges will be higher and this will result in a higher out-of-pocket expense for the member, Wagner noted. If a new agreement is not reached before June 30, 2015, services received from Sutter after that date will be paid for at the out-of-network benefit level.

Jill Antonides, PAMFs director of communications and public affairs, echoed those sentiments. She told the Town Crier that Sutter Health wants to reach a fair and reasonable contract and remain a part of Blue Shield network. Antonides added that the change would affect 240,000 PPO and 57,000 HMO Blue Shield members who use Sutter Health services.

In her email, Wagner pointed the finger at Sutter Health for the negotiation stalemate. She noted that Sutter sought an arbitration provision in contract talks to insulate them from any potential litigation.

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Health-care contract snafu hits PAMF customers