We are back from our June/conference season/summer recess and looking to resume our regular updates on activities involving providers and payers.
In a prior Friction Point post, Anthem Policy Penalizes In-Network Providers for Out-of-Network Care Providers, we discussed Anthem’s new policy that penalizes in-network hospitals when out-of-network providers provide services to enrollees at those hospitals (the “Policy”). As initially issued by Anthem, the Policy was effective as of January 1, 2026, for 11 states (OH, KY, IN, CO, CT, GA, ME, MO, NE, NH, and WI), but California’s effective date was June 1, 2026. The California Hospital Association (CHA) filed an action on May 4, 2026, to block the Policy in CA.
The CHA complaint alleged that Anthem’s Policy constitutes an unfair business practice that would prevent enrollees from utilizing their out-of-network benefits provided by their health plans. The Policy would also force hospitals to violate multiple California State laws, CHA alleged, including:
- Non-Conditional Medical Staff Membership – California law prohibits a hospital contracted with an insurer or health plan from conditioning medical staff membership based on a provider’s participation with a specific insurer or health plan. For hospitals to avoid the Policy’s penalties, in-network hospitals will effectively be forced to condition their medical staff membership to only those providers that are in-network with Anthem.
- Surprise Billings – Under California’s version of a surprise billings law, the Anthem Policy inhibits providers’ ability to provide non-emergency services to Anthem members at in-network hospitals in compliance with surprise billing requirements.
- False Advertising/Unfair Business Practices – Anthem specifically advertises the ability of enrollees to have out-of-network benefits, but this Policy would significantly limit enrollees’ ability to access and utilize out-of-network benefits due to the penalties and deterrence imposed. CHA alleges that the Policy creates an unfair business practice based on putting a monitoring burden on hospitals as to whether each provider is in or out of network. Anthem's lag time in updating enrollment and provider directories would also lead to inaccurate data for hospitals. CHA states this Policy will require in-network hospitals to pressure providers to contract Anthem to provide care at their facilities.
- Timely Access to Care – If a hospital’s contract with Anthem is terminated because it allowed an out-of-network provider to treat an enrollee, this would prevent the provider from giving the continued medically necessary care to the enrollee, as well as impede enrollees from having access to services that establish a continuity of care, all in violation of California laws.
As of the date of this post, Anthem has not filed an answer or responsive pleading to this complaint.
Of note here, each of the other 11 states where the Policy is effective has analogous state law protections around surprise billing, timely access to care, and false advertising. The California case is worth monitoring for potential applicability in other states and/or Anthem backing off on enforcing the Policy.
