The insurance giant Blue Shield of California reached a deal Tuesday with the University of California Health system to extend a contract that covers a large patient group, many of whom are state workers. The agreement comes after months of negotiating that threatened to impact 35,000 UC Davis patients.

Under the new agreement, the insurer and hospital system will extend their contracts until the two parties finalize formal renewal documents. The deal, which is subject to approval by the Department of Managed Health Care, means that state workers and others covered by the insurer can continue seeking care with UC Health providers.

“We are dedicated to ensuring members have access to affordable care and are pleased to be able to continue our partnership with UC Health,” Margeaux Cardona, a Blue Shield spokesperson, said in a statement.

Last week, as negotiations were ongoing, Blue Shield and UC health systems agreed to extend the contract until Aug. 9 to give both parties more time to reach an agreement.

A potential fray in those negotiations appeared when UC Davis alerted patients on Monday that Blue Shield intended to reassign individuals to other providers before the contract expired.

In an interview Tuesday before the deal was announced, UC Davis health spokesperson Steve Telliano said the hospital system wanted to alleviate patients’ concerns and encouraged members to call Blue Shield and tell the insurance company they wanted to stay with their current provider.

Those calls are unnecessary now.

Blue Shield said in a statement that it is reassigning HMO members back to their UC Health primary care providers, effective today. The insurer said enrollees do not need to call to maintain their UC Health primary care providers, but members can call and change their primary care provider at any time.

The insurer declined to share more information about the contract, but said more details would come in the following weeks.

A spokesperson with the UC Office of the President confirmed UC Health reached a deal with Blue Shield.

State workers ‘thankful’ for deal, CEO says

A significant number of state workers are covered by Blue Shield through California Public Employees Retirement System’s employer-sponsored plans.

“On behalf of 35,000 of our members, we are thankful that an agreement has been reached,” said CalPERS CEO Marcie Frost. “The new deal means our members will be able to keep their doctors, some of whom they known and have trusted for years, and that their health care will continue without any disruptions in service.”

While hospital systems and health insurers frequently have to renegotiate contracts for various groups of patients, those conversations are usually done in private. In some instances, those disputes spill out into the public’s view.

Usually, the parties end up reaching a consensus, said Paul Ginsburg, professor of the Practice of Health Policy at the University of Southern California.

The reassigning of patients, and UC Davis’ communication to patients, is one example in which these contracting disputes between insurers and hospitals get public attention. That adds pressure to the negotiations, which Ginsburg noted is “just the way our system gets the job done.”