Anthem, Dignity Contract Dispute Leaves Many Insureds In Limbo

North State residents insured by Anthem Blue Cross could find themselves looking for an alternative hospital for care as the insurance giant is locked in a contract dispute with Dignity Health.

Dignity has three facilities in the region: Mercy Medical Center Redding, Mercy Medical Center Mount Shasta and St. Elizabeth Community Hospital in Red Bluff.

Mercy Medical Center also is the only hospital in Shasta County that offers maternity services.

The two sides have been negotiating for several months and continue to do so in the hopes of reaching a deal. Anthem sent a letter to policyholders last week stating the current contract expired July 15.

Anthem on its website is directing policyholders to find alternative in-network facilities.

For its part, Dignity Health is directing patients and providers to keepdignityhealth.org for more information.

Redding health insurance broker Margaret Beck said if you were under a cancer care agreement or were already scheduled to have a baby at Mercy, it should be covered under the continuity-of-care provision. But it could mean more paperwork.

"But if you have voluntary or an elective procedure, don't schedule it at Mercy right now because it's going to be a headache," said Beck, who writes an insurance column for the Record Searchlight.

Shasta Community Health Center CEO Dean Germano said in an email "private physicians in the community have their own arrangements with insurance payers like Anthem Blue Cross so my understanding is that most of them are still within network."

"The hard part are the hospital-based services like maternity. Out-of-network costs tend to be much higher with more out of pocket to the consumer," he added.

Germano said the closest hospital to Redding that offers maternity services is Enloe Medical Center in Chico, which is about 75 miles from Redding.

On its website, Anthem advises policyholders to call the member service number on their insurance ID card to find out if they are eligible for continuity-of-care services.

Anthem also states that emergency medical services are considered a covered benefit and do not require pre-authorization regardless of where they are performed, Anthem officials said.

In an email to the Record Searchlight, Beck wrote: "These negotiations typically resolve themselves because both entities are too interdependent for them not to resolve. In the interim it creates a lot of anxiety for policyholders."

Germano agreed.

"Both they (Anthem) and Dignity need each other but negotiations are difficult, as we are seeing with cost pressures on the hospitals against cost pressures on the insurers and therefore employers and individuals who pay those premiums," he said.

Beck emphasized that the contract negotiations do not affect Medicare supplement plans.

Anthem and Dignity are attempting to negotiate new reimbursement rates "that will help protect affordability for consumers," the insurance carrier posted on its website.

In a statement emailed to the Record Searchlight, Dignity Health Medical Foundation CEO Dr. Robert Quinn said in part that Dignity is California's largest Medicaid provider "and has lost money in recent years."

"Dignity Health has offered Anthem a proposal with rates that do not even cover hospital inflation costs and are below increases in prior agreements," Quinn goes on to state.

Anthem in a statement says, "The problem is Dignity's rates are some of the highest among all health systems in California. ... We don't think our members and customers should pay substantially more for health care at Dignity when they can receive quality care from the many other providers in our network, and we are working to fix that."

On Tuesday, Anthem announced it had reached a multi-year contract extension with Sutter Health.

It's not the first time Anthem and Dignity have feuded.

In 2018, Beck wrote in the Record Searchlight that her office received a notice that the two sides were negotiating over reimbursement rates and there was a chance a deal wasn't going to be reached before the July 15 termination date.

"I know it's happened at least four, five times in my career between Anthem or Blue Shield with the different hospitals," Beck, who's been an insurance broker for more than 40 years, said.

While she did not know how many Anthem policyholders there are in Shasta County, Beck said the number is significant.

"Blue Shield and Anthem own this area," she said.

"Dignity Health has offered Anthem a proposal with rates that do not even cover hospital inflation costs and are below increases in prior agreements."

Dr. Robert Quinn

Dignity Health Medical Foundation CEO