Most people assume that choosing an in-network hospital means every part of their care will also be covered as in-network. While that’s often true, it’s not always the case.
A recent lawsuit filed by the California Hospital Association (CHA) against Anthem highlights one reason why. At the center of the dispute is a surprisingly simple fact: hospitals and physicians don’t always have the same relationship with a health insurance company.
The lawsuit challenges an Anthem policy involving certain out-of-network physician services provided at in-network hospitals: Anthem penalizes the in-network hospital when care involves certain out-of-network physicians or physicians groups. When this happens, Anthem reduces the hospital facility charge reimbursement amount by 10%.
It’s worth noting that this policy isn’t new; it’s only new to California. Anthem has already rolled it out in several other states.
According to CHA, this penalty policy unfairly reduces payments to hospitals and violates California law. Anthem disagrees, instead arguing that the policy simply closes a loophole in the federal No Surprises Act’s Independent Dispute Resolution (IDR) process.
The case will ultimately be decided by the courts. For most members, however, the legal arguments aren’t the most important part of the story. The real takeaway for members is understanding how provider networks actually work.
One hospital, many contracts
When you’re admitted to a hospital, it may feel like you’re dealing with a single organization. Behind the scenes, however, that’s often not the case.
Depending on the care you receive, you might be treated by:
- The hospital itself;
- Your attending physician or surgeon;
- An anesthesiologist;
- A radiologist;
- A pathologist;
- An emergency physician; or
- Other specialists involved in your care.
Some of these providers are hospital employees. Others belong to independent physician groups that simply have permission to practice at the hospital. Those physician groups frequently negotiate their own contracts with health insurance carriers.
That means it’s entirely possible for a hospital to participate in an insurer’s network while one or more physicians practicing there have different contractual arrangements.
Why does that matter?
Most of the time, members never notice these behind-the-scenes relationships. The hospital, physicians, and insurance carrier work through the details without affecting the patient’s experience.
Occasionally, however, disagreements arise over who should bear the financial responsibility when an out-of-network physician provides care at an in-network hospital. That’s the question at the heart of California Hospital Association vs. Anthem Blue Cross.
Does this change my coverage?
For most Anthem members, the answer is no.
This lawsuit does not change your current health insurance benefits or require you to choose a different hospital. Instead, it concerns how Anthem and hospitals allocate financial responsibility between themselves.
That said, cases like this can still matter to members. Provider contracts determine how insurers and medical providers work together, and disputes over those contracts can eventually influence provider networks, reimbursement policies, and the availability of certain services.
The bigger picture
One of the themes I’ve noticed while following provider network disputes is that they’re often more complicated than they first appear. It’s easy to think of a hospital as a single entity, but modern health care is built on a network of separate organizations, each with its own contracts and business relationships.
That’s one reason contract negotiations can become so complex. Even when everyone agrees that patients should continue receiving care, the parties may still disagree about who is responsible for various administrative and financial obligations.
For members and employers, the California lawsuit is a useful reminder that “in-network” doesn’t always mean every provider involved in your care has the same contractual relationship with your health plan. Understanding that distinction makes it much easier to follow stories like this one—and to understand why provider network disputes sometimes arise in the first place.