Elevance Health’s out-of-network provider penalty policy has drawn sharp legislative backlash and opposition from hospitals and physician groups across the country.
Here are seven things ASCs leaders and physicians should know:
1. How the penalty works. In-network facilities that use out-of-network providers to treat Anthem commercial members, in either inpatient or outpatient settings, may face an administrative penalty equal to 7.5% of the allowed amount on those claims. Facilities that continue using out-of-network providers risk termination from Anthem’s network entirely.
2. Where it applies. Elevance first rolled out the policy at the start of the year across 11 states for its Anthem Blue Cross Blue Shield commercial plans. It has since expanded to New York, where the penalty rate is lower than the 10% applied elsewhere, and California.
3. What’s exempt. The policy carves out several categories: emergency services, cases where Anthem has granted prior approval for a nonparticipating provider, situations where no in-network provider is available in the same geographic area, and rural, critical access, and safety-net hospitals, defined as those at or above the 75th percentile for dual Medicare-Medicaid eligible patients among all acute care hospitals.
4. California lawsuit. On May 4, the California Hospital Association filed a lawsuit against Anthem Blue Cross, alleging the policy violates state law and puts unfair financial pressure on hospitals already under economic strain. CHA President and CEO Carmela Coyle said the policy amounts to Anthem offloading its own network management failures onto providers.
“Anthem’s new policy is trying to force hospitals to solve a problem Anthem created,” CHA President and CEO Carmela Coyle said in a May 4 news release. “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 healthcare.”
5. Indiana pushes back. In March, Indiana enacted a law prohibiting insurers from penalizing hospitals for using out-of-network providers. The move carries particular weight given that Indianapolis-based Elevance controls roughly 68% of the state’s commercial insurance market, according to the Indiana Hospital Association.
6. Physician groups call the policy unworkable. The American Society of Anesthesiologists, the American College of Emergency Physicians and the American College of Radiology are among the specialty societies that have urged Elevance to abandon the policy, calling it “deeply flawed and operationally unworkable.”
7. Surgeons warn of a cascade effect. Brian Gantwerker, MD, a spine surgeon from the Craniospinal Center of Los Angeles, told Becker’s the policy is “very anti-competitive behavior from an already embattled insurer.”
“To penalize a hospital because physicians don’t take their insurance for any number of reasons is insanity,” he said. “Physicians have the right to take whatever carrier they want as an independent physician, and I think there’s going to be several potential outcomes from this. More physicians will drop Blue Cross because of its anti-competitive behavior. Fewer physicians will then go to hospitals that are going along with the penalization of physicians that don’t take Blue Cross, and I think those hospitals will either need to hire more physicians and will drive up their costs, or they’ll need to break their contracts with Blue Cross.”
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.