Dignity Health and Anthem Blue Cross of California signed a new contract that will keep more than two dozen Dignity facilities across the Golden State in the insurer's network, the companies announced Monday.
Negotiations had stalled between Dignity, which is part of Chicago-based CommonSpirit Health and is the largest hospital provider in California, and Anthem Blue Cross. The dispute affected more than 1 million Anthem commercial PPO, EPO, HMO and POS members, as well as some Medicaid and Medicare Advantage policyholders when the contract expired July 15. The new agreement is retroactive to July 15 and extends to April 30, 2025.
"We deeply appreciate the patience of our patients, employer and physicians as we have worked through this process," Dr. Robert Quinn, CEO of the Dignity Health Medical Foundation, said in a news release. "From the beginning, our goal in working with Anthem has always been about ensuring we can continue to meet the needs of our patients today and in the future."
Anthem Blue Cross needed to take a hard stance against sharply rising in healthcare expenditures, the company contended. Dignity rates are some of the highest among California health systems and is almost 30% more expensive than its peers, Anthem executives wrote on the company's website when the contract expired.
Dignity tempered its rate increase demands, which were below hospital inflation costs, the health system countered at the time.
"We are pleased to continue working with Dignity. While we understand this wasn't easy for consumers, it was necessary for us to stand firm as part of our efforts to help slow the sharp rise in health care costs," John Pickett, regional vice president of provider solutions at Anthem Blue Cross, said in a news release.
Dignity held Anthem Blue Cross claims filed after July 15, so patients should not experience any impact on their bills, the health system said.
Provider-payer disagreements have become relatively commonplace as health systems fight to maximize revenue and insurers face increasing pressure to rein in costs, Robert Wood Johnson Foundations researchers wrote in a recent analysis of contract disputes across six states, finding that they can interrupt care and increase expenses.
When providers and insurers reach impasses, state authorities should require insurance carriers to submit advance notices to patients about their rights when a facility is eliminated from their networks, researchers recommended. Regulators could also instruct insurers to withhold unanticipated out-of-network bills if reasonably close and timely services are not available.
Pennsylvania, for instance, can temporarily extend a disputed contract and hold public hearings to elevate the issues between the parties, the researchers wrote.