Carbon Health and Anthem Blue Cross of California have been unable to reach a new contract, a scenario playing out more frequently between providers and insurers.
Carbon, which combines traditional brick and mortar urgent care clinics with telehealth, said in a blog post Monday that its contract with Anthem expired March 17, which it said saddled more than 5,000 California patients with higher out-of-pocket costs for care.
A spokesperson for Carbon said Anthem has stopped processing each out-of-network claim submitted since mid-March, a practice that Anthem denies.
“With everything that has happened with inflation, the cost to serve patients and the associated administrative burden, we cannot continue to serve Anthem’s commercial PPO members at a rate that was lower than the Medicare rate,” the Carbon spokesperson said.
Anthem said in a statement that Carbon “insists on excessive rate increases, which would result in higher costs for the people and businesses we serve.”
Stalemates are increasingly common between providers and insurers as providers try to set multiyear contracts that account for providers’ higher-than-average labor and supply costs, looming Medicare reimbursement cuts and other financial pressures.
Through May 1, there have been 27 contract disputes that providers or payers have made public, up from 11 during the same period last year, said Adam Broder, a managing director at FTI Consulting.
“I am expecting more of these to go public and these contract disputes to affect more patients,” he said, noting the continued pressure on hospital margins amid higher labor and supply costs. “At what point do lawmakers and regulators feel like they need to step in?”
Some state agencies have fined insurers for violating network adequacy laws, which are designed to maintain reasonable access to in-network care. The Illinois Department of Insurance, for instance, fined Health Care Services Corp. $339,000 in March 2022 for not submitting documentation detailing changes to its network after it terminated a contract with Springfield Clinic.
Carbon and Anthem had a contract in place since 2013 that was renegotiated annually, according to Carbon. Publicly available price transparency data for a new patient outpatient visit of up to 44 minutes shows that Anthem paid Carbon below the $132 Medicare rate while it paid large systems between $280 and $340.
In August, Carbon trimmed its employee base by 8%, or approximately 200 employees.