Nearly 400 California hospitals are taking Anthem Blue Cross to court, asking a Los Angeles judge to slam the brakes on a new payment rule they say would punish facilities whenever an out-of-network doctor treats an Anthem member inside an in-network hospital. The coalition argues the policy effectively shifts Anthem’s obligation to maintain adequate physician networks onto hospitals and threatens to pile fresh financial strain onto a system they say is already stretched thin.
What the suit argues
In a complaint filed May 4 in Los Angeles County Superior Court, the California Hospital Association (CHA) targets Anthem’s “Out-of-Network Policy,” which would tack on a 10% “administrative penalty” to facility claims whenever nonparticipating physicians are involved in a patient’s care and could even be used as grounds to remove hospitals from Anthem’s network. CHA says the rule would turn hospitals into de facto insurance police, forcing them to track and manage doctors’ network status while chipping away at statutory protections that let patients use out-of-network benefits at in-network facilities. The association is asking the court for swift intervention, according to a calhospital.org news release.
How Anthem would enforce it
Anthem laid out the details in a provider bulletin titled “Facility Administrative Policy: Use of a Nonparticipating Care Provider.” The company says it will cut facility payments by 10% whenever nonparticipating clinicians take part in a patient’s care, with carve-outs for emergencies, prior authorizations and certain rural or safety-net hospitals. Elevance Health, Anthem’s parent company, has already rolled the policy out in other states and says it will extend the approach to California on June 1. Those rollout plans appear in Anthem’s bulletin and have been flagged by physician groups tracking the change, as described at files.providernews.anthem.com.
Hospitals say the policy is unlawful
CHA argues the policy runs headfirst into California law, citing Health & Safety Code section 1322 and AB 72, which allow patients to receive care from out-of-network physicians at in-network hospitals and bar facilities from tying staff privileges to an insurer’s network requirements. Representing roughly 400 hospitals across the state, the group says Anthem’s rule would corner facilities into either violating state protections or swallowing steep reimbursement cuts. “Anthem’s new policy is trying to force hospitals to solve a problem Anthem created,” CHA President Carmela Coyle said, according to kslaw.com.
Broader pushback from hospitals and doctors
California is not the only battleground. Major national groups have warned that Anthem’s approach could hurt both patients and providers and might undercut the No Surprises Act’s dispute-resolution process. The American Hospital Association wrote to Elevance urging the company to rescind the policy, and the California Medical Association along with dozens of specialty societies has pressed similar objections. Physician and hospital advocates argue the rule could accelerate consolidation, squeeze independent practices and reduce access in underserved communities, according to aha.org.
Relief sought and Anthem’s response
CHA’s complaint asks the court for an injunction blocking Anthem from imposing penalties or terminating contracts with participating hospitals, a declaratory judgment that the policy is unlawful and attorneys’ fees under state statutes. The filing frames the policy as an unfair business practice that would coerce hospitals into policing network status rather than letting the insurer maintain its own network. Anthem has told reporters the rule is meant to curb alleged misuse of the independent dispute-resolution process, saying, “That out-of-network billing is not fair, and our policy creates an incentive for hospitals to stop it,” according to calhospital.org.
With the policy set to take effect on June 1, the case is now one to watch for hospitals and patients across California. Any court order halting Anthem would block the insurer’s expansion of the policy in the state and could influence similar fights in other markets. The initial reporting on the filing appeared in the Sacramento Business Journal, and both sides say the dispute will likely continue in courtrooms and in regulatory and legislative forums.
