Dignity Health, California’s largest nonprofit hospital network, announced this month that it no longer had a deal with Anthem Blue Cross, saying the health insurer was refusing to pay its fair share of hospital services.
Negotiations have been going on for six months, but escalated on July 16 when most Dignity Health hospitals in California – including Sequoia Hospital in Redwood City – ended their deals with Anthem. The deadlock means Anthem customers who rely on Sequoia may have to pay off-grid costs for now, although the two sides are still in “active talks” to bring hospitals back into the network, according to Dignity.
Bay Area hospitals have struggled to renew their contracts with Anthem in recent years, with many contracts being dropped due to disputes over what the country’s second-largest health insurer is willing to pay for the services of health. Dignity Health is the state’s largest Medi-Cal provider and has lost money in recent years, but Anthem was unwilling to compensate the hospital network with even modest rates, said Robert Quinn, president. and CEO of Dignity Health.
“Dignity Health has come up with a proposal to Anthem with rates that don’t even cover hospital inflation costs and are lower than increases included in previous deals,” Quinn said.
Dignity is the latest to ditch Anthem over what healthcare providers describe as nip-of-the-money tactics that go way beyond those of other health insurers. Mountain View-based El Camino Health last month terminated their contract with Anthem over the same concerns. Sutter Health ran into similar issues with Anthem in 2019, followed by a clash between MarinHealth and the insurance giant last year.
Anthem has defended its approach to contract negotiations, arguing that the costs of healthcare in northern California are disproportionately high and can allow hospitals to reap big profits. The company also claims that the higher hospital rates are passed on to individual customers and employers who offer health care plans to their workers. In a statement, Anthem said it has not broken off negotiations with Dignity Health and is looking for a new deal focused on affordability.
“We continue to negotiate in good faith with Dignity in the hope of reaching a reasonable deal, a deal that compensates Dignity fairly and protects the affordability of our members and customers,” a spokesperson for Anthem said Thursday.
A total of 29 hospitals and medical centers were affected by Dignity’s decision to terminate contracts with Anthem, including Sequoia Hospital and two San Francisco hospitals – Saint Francis Memorial Hospital and St. Mary’s Medical Center. The expired contract affects members enrolled in the PPO, EPO, HMO, and POS commercial benefit plans, as well as certain Medicaid and Medicare Advantage plans.
On its website documenting the dispute with Dignity, Anthem says the healthcare system is already nearly 30% more expensive than other healthcare systems in the state, but now threatens to drop the insurer if it doesn’t. ‘do not accept “substantial” rate increases. under a new contract.
“We cannot and will not accept excessive rate increases that will make care at Dignity even less affordable for those we serve,” said Anthem.
The American Hospital Association has criticized Anthem in recent years for adopting controversial policies designed to save money at the expense of hospitals and patients. Although it was not implemented in California, the health insurer rolled out a policy in 2017 to deny emergency service coverage in hospitals if it decides symptoms and conditions were not warranted. not emergency care, making this decision after the fact rather than on the basis of what was observed by the patient and medical staff prior to the diagnosis.
The company also sought to no longer cover outpatient imaging services in hospitals, but to divert patients to stand-alone imaging centers for MRIs and CT scans.
While Dignity Health has gone through difficult financial times in recent years, Anthem has raked in billions in profits as a powerful for-profit insurance company, Dignity Health said in a statement. Yet Anthem has refused to pay more than it does for the services and to accept a “reasonable” contract, and the result is that more than a million patients have lost access to networked care. Dignity, for its part, is encouraging its patients to take action and is urging Anthem to sign a new agreement.
With the expiration of the contract, some patients will still have access to network tariffs, especially those who require “ongoing” care for things like cancer treatment, pregnancy and serious chronic illnesses. Anthem also said in a statement it was taking steps to help members make a “smooth transition” to new healthcare facilities that are still networked.