Elevance Health is bringing its out-of-network provider penalty policy to New York on July 1, continuing a state-by-state expansion that has drawn legislative backlash and opposition from hospitals and physician groups.
Under the policy, in-network facilities in New York that use out-of-network providers to treat Anthem commercial members in inpatient or outpatient settings may face an administrative penalty equal to 7.5% of the allowed amount of claims involving those providers. Continued use of out-of-network providers could result in termination from Anthem’s network entirely.
Elevance first implemented the policy at the start of the year across 11 states for its Anthem Blue Cross Blue Shield commercial plans. In March, the company announced it would extend the policy to California, effective June 1. New York, which had not previously been included, has a penalty rate lower than the 10% applied in the other states.
In March, Indiana enacted a law banning insurers from penalizing hospitals for using out-of-network providers. Indianapolis-based Elevance controls roughly 68% of the state’s commercial insurance market, according to the Indiana Hospital Association.
The New York policy carries the same exemptions applied in other states: emergency services, cases where Anthem has granted prior approval for use of a nonparticipating provider, instances where no in-network provider is available within the same geographic area, rural hospitals, critical access hospitals, and safety-net hospitals defined as those at or above the 75th percentile of the proportion of Medicare beneficiaries dually eligible for Medicare and Medicaid across all acute care hospitals.
Elevance has defended the policy as a response to what it characterizes as widespread misuse of the independent dispute resolution process established under the No Surprises Act. Provider groups have argued the policy circumvents NSA protections, shifts financial pressure onto facilities and could be used to pressure independent physicians into accepting Anthem contracts on unfavorable terms.
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