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Hospitals clash with Anthem Blue Cross over health care prices, leaving patients in a lurch

El Camino Health severs ties with country's second largest health insurer

El Camino Hospital is battling with Anthem Blue Cross over a new contract. Courtesy El Camino Health.

El Camino Health terminated its contract with Anthem Blue Cross last month over price disputes, suddenly putting the hospital out of network for those covered by the country's second-largest health insurer.

But it's not the first time and it's unlikely to be the last, as many Bay Area hospitals are finding it tough to live with Anthem's price-cutting tactics.

Rising health care costs are at the heart of these clashes, which are happening with surprising regularity. El Camino and Stanford Health Care have both temporarily dropped Anthem at least three times over the last decade, along with MarinHealth last year and Sutter Health in 2019.

The story is almost always the same: The hospitals accuse Anthem of penny pinching and paying less for services than other insurers, while Anthem describes health care costs in Northern California as unreasonably high and partly to blame for the country's high cost for health care.

These disputes rarely happen between local hospitals and other health insurers.

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El Camino Health officials said in a statement that Anthem's payment terms have been "well below" all other insurance companies, despite turning a massive $1.7 billion profit for the first quarter of this year. Hospitals, meanwhile, have seen costs increase during the COVID-19 pandemic, though El Camino's finances have swiftly bounced back.

"We are disappointed that Anthem was unable to acknowledge the vital role El Camino Health has played in treating their members with the highest quality care during these difficult times," El Camino said in the statement.

'Anthem ... has lobbied to expand policies that would discourage some of the most vulnerable residents from obtaining emergency medical care in public programs, and, even in the midst of COVID-19, it has not changed course.'

-American Hospital Association, letter to Congress

Anthem, for its part, says it is offering year-over-year rate increases — just not enough to satisfy El Camino's demands — and that any price hike would harm customers and local employers who pay for health insurance plans.

"It's disappointing that El Camino would choose to terminate its hospital contract with us and then demand excessive rate increases," Anthem said. "The increases El Camino has demanded would result in higher premiums, deductibles and copays for employers and families."

Hospitals across the U.S. have quarreled in recent years with the country's two largest insurers, Anthem and United Healthcare, over controversial policies designed to save money. Anthem for years has been denying coverage for emergency services at hospitals if it decides the symptoms and conditions don't warrant emergency-level care, but it makes that determination after the fact. Doing so appears to violate a 1997 federal law, which requires that the need for emergency services be evaluated based on what a regular person deems an emergency, according to the American Hospital Association (AHA).

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Anthem said this policy was never rolled out in California.

In a letter to Congress in October, the AHA warned that Anthem is using this as a blunt tool to save money and pass costs onto hospitals and patients, even during the midst of a public health crisis.

"It is unacceptable to discourage anyone from seeking care they believe they need, but it is absolutely unconscionable to do so during a public health crisis," the AHA wrote in the letter. "Anthem, for example, has lobbied to expand policies that would discourage some of the most vulnerable residents from obtaining emergency medical care in public programs, and, even in the midst of COVID-19, it has not changed course."

Hospitals have a vested interest in denied claims. Because the costs are frequently high and patients often struggling to pay for uncovered care, often times the amount owed must be written off, become a "bad debt" and a financial loss. At El Camino, for example, the hospital lost more than $60 million during the 2019-20 fiscal year for unreimbursed and subsidized health services.

Around the same time as Anthem's controversial emergency care policy, the company also announced it would no longer cover outpatient imaging services at hospitals, instead diverting patients to free-standing imaging centers. MRIs and CT scans can be a big source of hospital revenue but also tend to cost more, and the policy to no longer cover the services further strained the relationship between hospitals and insurance companies.

Adding to the animosity, these kinds of charges are reportedly enacted mid-contract, shifting the rules on hospitals after they've inked an agreement with insurance companies.

Anthem justifies its hard negotiating stance by pointing out that health care costs are sky high in Northern California, and that El Camino is no exception. The insurer cited data that an average hip replacement costs an average of $75,000 at El Camino, compared with $29,000 statewide, while a colonoscopy costs $8,700 compared with $4,000. El Camino did not dispute the numbers, but said the comparisons are dishonest. Carlos Bohorquez, El Camino's chief financial officer, said health care costs are higher in the Bay Area and subject to a higher rate of inflation — a rate that Anthem has refused to keep up with in negotiations to date.

"Indiana-based Anthem has cherry-picked statewide averages, which include much lower-cost areas of the state to provide a disingenuous comparison and is not an accurate point of reference," Bohorquez said.

Anthem representatives are quick to point out that the company is not free to pocket all of its revenue from premiums, due to state requirements that at least 80% to 85% go to pay for health services. But the company is still posting record-breaking profits — Bohorquez said Anthem forked over $277 million to shareholders in June through a quarterly cash dividend payment, close to 19% higher than the prior year.

"The dividend payment represent funds that do not go toward any health care service and illustrates the lucrative nature of Anthem's business model as a middleman — paying health care providers less, charging members more and pulling profits out of the health care economy to pay shareholders," he said.

The two parties say they are still working to negotiate a new agreement, but in the meantime El Camino will no longer be a part of the Anthem Blue Cross network. Enrollees received a letter from Anthem suggesting that customers go to alternative sites for care, including Stanford, Good Samaritan in San Jose, Sequoia Hospital in Redwood City and Santa Clara Valley Medical Center. Patients with pressing health care needs are eligible for "continued" care and will be allowed to stay at El Camino as an in-network option, which encompasses cancer treatment, pregnancy and serious chronic conditions.

Any updates, along with information on continued care, are available on El Camino's website. Past disputes have been resolved in three to six months.

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Kevin Forestieri writes for the Mountain View Voice, a sister publication of PaloAltoOnline.com.

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Hospitals clash with Anthem Blue Cross over health care prices, leaving patients in a lurch

El Camino Health severs ties with country's second largest health insurer

by / Mountain View Voice

Uploaded: Fri, Jul 9, 2021, 4:42 pm

El Camino Health terminated its contract with Anthem Blue Cross last month over price disputes, suddenly putting the hospital out of network for those covered by the country's second-largest health insurer.

But it's not the first time and it's unlikely to be the last, as many Bay Area hospitals are finding it tough to live with Anthem's price-cutting tactics.

Rising health care costs are at the heart of these clashes, which are happening with surprising regularity. El Camino and Stanford Health Care have both temporarily dropped Anthem at least three times over the last decade, along with MarinHealth last year and Sutter Health in 2019.

The story is almost always the same: The hospitals accuse Anthem of penny pinching and paying less for services than other insurers, while Anthem describes health care costs in Northern California as unreasonably high and partly to blame for the country's high cost for health care.

These disputes rarely happen between local hospitals and other health insurers.

El Camino Health officials said in a statement that Anthem's payment terms have been "well below" all other insurance companies, despite turning a massive $1.7 billion profit for the first quarter of this year. Hospitals, meanwhile, have seen costs increase during the COVID-19 pandemic, though El Camino's finances have swiftly bounced back.

"We are disappointed that Anthem was unable to acknowledge the vital role El Camino Health has played in treating their members with the highest quality care during these difficult times," El Camino said in the statement.

Anthem, for its part, says it is offering year-over-year rate increases — just not enough to satisfy El Camino's demands — and that any price hike would harm customers and local employers who pay for health insurance plans.

"It's disappointing that El Camino would choose to terminate its hospital contract with us and then demand excessive rate increases," Anthem said. "The increases El Camino has demanded would result in higher premiums, deductibles and copays for employers and families."

Hospitals across the U.S. have quarreled in recent years with the country's two largest insurers, Anthem and United Healthcare, over controversial policies designed to save money. Anthem for years has been denying coverage for emergency services at hospitals if it decides the symptoms and conditions don't warrant emergency-level care, but it makes that determination after the fact. Doing so appears to violate a 1997 federal law, which requires that the need for emergency services be evaluated based on what a regular person deems an emergency, according to the American Hospital Association (AHA).

Anthem said this policy was never rolled out in California.

In a letter to Congress in October, the AHA warned that Anthem is using this as a blunt tool to save money and pass costs onto hospitals and patients, even during the midst of a public health crisis.

"It is unacceptable to discourage anyone from seeking care they believe they need, but it is absolutely unconscionable to do so during a public health crisis," the AHA wrote in the letter. "Anthem, for example, has lobbied to expand policies that would discourage some of the most vulnerable residents from obtaining emergency medical care in public programs, and, even in the midst of COVID-19, it has not changed course."

Hospitals have a vested interest in denied claims. Because the costs are frequently high and patients often struggling to pay for uncovered care, often times the amount owed must be written off, become a "bad debt" and a financial loss. At El Camino, for example, the hospital lost more than $60 million during the 2019-20 fiscal year for unreimbursed and subsidized health services.

Around the same time as Anthem's controversial emergency care policy, the company also announced it would no longer cover outpatient imaging services at hospitals, instead diverting patients to free-standing imaging centers. MRIs and CT scans can be a big source of hospital revenue but also tend to cost more, and the policy to no longer cover the services further strained the relationship between hospitals and insurance companies.

Adding to the animosity, these kinds of charges are reportedly enacted mid-contract, shifting the rules on hospitals after they've inked an agreement with insurance companies.

Anthem justifies its hard negotiating stance by pointing out that health care costs are sky high in Northern California, and that El Camino is no exception. The insurer cited data that an average hip replacement costs an average of $75,000 at El Camino, compared with $29,000 statewide, while a colonoscopy costs $8,700 compared with $4,000. El Camino did not dispute the numbers, but said the comparisons are dishonest. Carlos Bohorquez, El Camino's chief financial officer, said health care costs are higher in the Bay Area and subject to a higher rate of inflation — a rate that Anthem has refused to keep up with in negotiations to date.

"Indiana-based Anthem has cherry-picked statewide averages, which include much lower-cost areas of the state to provide a disingenuous comparison and is not an accurate point of reference," Bohorquez said.

Anthem representatives are quick to point out that the company is not free to pocket all of its revenue from premiums, due to state requirements that at least 80% to 85% go to pay for health services. But the company is still posting record-breaking profits — Bohorquez said Anthem forked over $277 million to shareholders in June through a quarterly cash dividend payment, close to 19% higher than the prior year.

"The dividend payment represent funds that do not go toward any health care service and illustrates the lucrative nature of Anthem's business model as a middleman — paying health care providers less, charging members more and pulling profits out of the health care economy to pay shareholders," he said.

The two parties say they are still working to negotiate a new agreement, but in the meantime El Camino will no longer be a part of the Anthem Blue Cross network. Enrollees received a letter from Anthem suggesting that customers go to alternative sites for care, including Stanford, Good Samaritan in San Jose, Sequoia Hospital in Redwood City and Santa Clara Valley Medical Center. Patients with pressing health care needs are eligible for "continued" care and will be allowed to stay at El Camino as an in-network option, which encompasses cancer treatment, pregnancy and serious chronic conditions.

Any updates, along with information on continued care, are available on El Camino's website. Past disputes have been resolved in three to six months.

Kevin Forestieri writes for the Mountain View Voice, a sister publication of PaloAltoOnline.com.

Comments

William Hitchens
Registered user
Mountain View
on Jul 12, 2021 at 10:18 am
William Hitchens, Mountain View
Registered user
on Jul 12, 2021 at 10:18 am

"Bay Area hospitals have accused Anthem of penny pinching and paying less for services than other insurers". Exactly my feeling toward Anthem Blue Cross during my brief, frustrating experience with them as a covered patient. The had far too many exclusions, limitations, and high deductibles.


plantfruittrees
Registered user
Greendell/Walnut Grove
on Jul 12, 2021 at 11:17 am
plantfruittrees, Greendell/Walnut Grove
Registered user
on Jul 12, 2021 at 11:17 am

Anthem yanked Stanford off its list several years ago without notifying its customers. They should be required to at least do that much. My doctor sent me straight to the ER in an emergency and I had no idea that as of the day before I had, as far as I can tell, no covered hospital--Stanford had always been the approved one on our plan.

Stanford notified me first that the bill was $13k but that it should not be my problem that Anthem was refusing to pay; they told me they would bill me my usual co-pay only and they would pursue Anthem for the rest, specifically because they wanted me to get healthcare when I needed it and not to be afraid to come in.

After that, I got a brusque letter from Anthem saying so sad too bad you were not covered and it's your fault for not checking on your way in. Gee thanks, way to impress your customers.

We don't have Anthem anymore.


James Fisher
Registered user
Menlo Park
on Jul 12, 2021 at 11:48 am
James Fisher, Menlo Park
Registered user
on Jul 12, 2021 at 11:48 am

Anthem Blue Cross is a low-balling medical insurance company regardless if one is a patient or a hospital administrator.


Resident 1-Adobe Meadows
Registered user
Adobe-Meadow
on Jul 12, 2021 at 10:48 pm
Resident 1-Adobe Meadows, Adobe-Meadow
Registered user
on Jul 12, 2021 at 10:48 pm

My health insurer - Health Net sent out a letter saying that they were attacked by the ransome ware people and all of the person's information has been taken - who knows to where. And each individual is suppose to go through all types of action to protect themselves. One of the things that I do is check in with PAMC to see what insurer's they are currently accepting. Way back when Aetna was not accepted. I have found that when I was not on Medicare I got really good service. When I went on Medicare with a supplemental plan the service was not so good - they cannot bill enough for what they do and have all type restrictions.
El Camino came through for me with covid shots. My insurance paid for all of that but I am not happy with Health Net. I was considering Anthem but now will keep looking. All of the issues now with everything you touch that uses money is falling apart.


Penny Kobiesky
Registered user
Los Altos
on Jul 13, 2021 at 8:16 am
Penny Kobiesky, Los Altos
Registered user
on Jul 13, 2021 at 8:16 am

Bernie Sanders and Elizabeth Warren's concept of Medicare for all could remedy this problem by eliminating insurance companies altogether.

A government-issued healthcare card that the insured could use anywhere and for anything (except cosmetic surgery) would seal the deal on a comprehensive national insurance plan and billings could then go directly to the federal government for compensation.


Resident 1-Adobe Meadows
Registered user
Adobe-Meadow
on Jul 13, 2021 at 9:05 am
Resident 1-Adobe Meadows, Adobe-Meadow
Registered user
on Jul 13, 2021 at 9:05 am

Medicare is deducted out of my social security payment - in part. Social security is based on the money people put in while working. All asssumption now are based on the fact that someone worked - paid taxes (FICA) and now is being paid back based on what was deducted while working. Bernie does not addrss the whole scenario - financial set-up of the total Social Security plan - which includes Medicare. Yes - this whole situation needs some good thinking and work. But having money deducted out of my social security payment to patially offset the cost of Medicare is one of those considertions.


L. Malbec
Registered user
Portola Valley
on Jul 13, 2021 at 9:31 am
L. Malbec, Portola Valley
Registered user
on Jul 13, 2021 at 9:31 am

Funding a national Medicare For All program would require serious federal budgetary considerations and constraints.

Where would the money come from?

Various cuts in other federal programs would be required and this would lead to even more partisan bickering between current Republicans and Democrats.

The Republicans as a rule are not too keen on expanded social programs and would rather allocate large sums of taxpayer dollars to the military effort.

And while the United States must remain adequately prepared for an eventual military conflict with China, the recently created U.S. Space Force is an unnecessary budgetary drain as is sending foreign aid to other countries.

By cutting foreign aid, the United States could implement a national health care program.


Resident 1-Adobe Meadows
Registered user
Adobe-Meadow
on Jul 13, 2021 at 5:04 pm
Resident 1-Adobe Meadows, Adobe-Meadow
Registered user
on Jul 13, 2021 at 5:04 pm

Back to Bernie - people in Congress get all type of benefits that the rest of the working force does not. When he talks about Medicare it is unclear to me if he even is dirctly involved. His Congressional package pays for his medical. When people throw out a Medicare for ALL I have to wonder if they even understand what that means - does their congressional package for health just pay out what ever with no consideration as to what is the "normal" way this is handeled.

People in Congress are not working on what the normal citizen is subject to. If we assume that everyone here is working with what is the normal then your Medicare Card and value is based on your earning power while working - how much was paid in as FICA over your working life. That also addresses the amount of Social Security you are entitled to when you apply for payments. People - when working typically get a report each year as to how much was paid in to the system. This is an organized financial system - you don't just run in the door an say change it.


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