Anthem Blue Cross early this year unveiled a policy imposing a penalty on hospitals for claims that include out-of-network providers and puts them at risk from being terminated from the network entirely. As anticipated, that policy is being challenged in court.
The California Hospital Association in early May sued Anthem over the policy. It said hospitals would be penalized every time an Anthem enrollee receives hospital care from an out-of-network physician, even if the hospital itself is in the insurance company's network, by levying a 10% reduction to the hospital's reimbursement.
"Anthem's new policy is trying to force hospitals to solve a problem Anthem created," said Carmela Coyle, president and CEO of the association. "It's illegal, ignores the agreements Anthem has with its enrollees and will lead to further financial stress for California hospitals and the communities they care for during an extremely unstable period in health care."
The lawsuit makes two specific claims:
- Anthem's policy unfairly penalizes hospitals, because the only remedy to avoid cuts to reimbursement would violate state law. California statute is clear that hospitals are prohibited from requiring physicians (and physician groups) to be part of any insurer's network.
- It is Anthem's responsibility to make certain that doctors are contracted with the insurance company rather than foist that responsibility onto hospitals.
"We are confident the courts will recognize Anthem's move as a flagrant attempt to increase their profits at a time when millions of Californians are projected to lose their health care coverage," said Daron Tooch, the association's legal counsel. "The policy is unethical and unlawful, and we look forward to a decision from the court that protects not just hospitals, but also Anthem enrollees who trust that their insurance company will respect their right to choose their own doctor."
Anthem said its policy was designed in response to provider behavior under the federal No Surprises Act, which has seen large numbers of claims disputes making it to arbitration rather than being resolved in negotiations. Although the legislation is designed to avert surprise medical bills for patients, payers argue that it can be used to justify reimbursement for nonemergency services.
Hospitals countered that the policy could force providers to join Anthem's network under unfavorable terms. When the policy was announced, the American Society of Anesthesiologists, American College of Emergency Physicians and American College of Radiology sent a joint letter to the insurer asking it to rescind the policy, calling it "deeply flawed and operationally unworkable."
The three organizations said that policy would force hospitals to pressure independent providers to join Anthem's network "under unfavorable terms."
"It effectively shifts Anthem's network adequacy obligations onto facilities, holding them financially liable for the contracting status of independent physician groups -- an area over which they have no control or infrastructure to manage," the groups wrote.
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