California Hospitals Challenge Anthem’s Out-of-Network Penalty Policy

May 20, 2026

Quick Summary

California hospitals are suing Anthem over a policy tied to out-of-network physician claims
The policy imposes a 10% reimbursement penalty on hospitals for certain out-of-network services
Hospitals argue the policy violates California law and unfairly shifts responsibility onto providers
Anthem says the policy is meant to address abuse of the No Surprises Act dispute process
The lawsuit could have significant implications for hospital reimbursement and provider networks

Hospitals Push Back Against Anthem Policy

The California Hospital Association (CHA) has filed a lawsuit against Anthem Blue Cross over a policy that penalizes hospitals when patients receive care from out-of-network physicians at in-network facilities. The policy, which Anthem began expanding into California in 2026, imposes a 10% reduction in reimbursement for hospital claims involving certain out-of-network providers, including radiologists and physicians participating in scheduled procedures.

According to CHA, the policy unfairly places financial responsibility on hospitals for matters that are outside of their control. California hospitals argue that state law prohibits hospitals from requiring physicians or physician groups to participate in a specific insurer’s network, making it difficult or impossible for facilities to comply with Anthem’s expectations.

Concerns Over State Law and Operational Burdens

In the lawsuit, hospital leaders contend that Anthem’s policy conflicts with California Assembly Bill 72, which allows out-of-network physicians to provide care at in-network hospitals under certain circumstances. The law places responsibility for notifying patients about out-of-network care and obtaining consent on the physician rather than the hospital.

CHA President and CEO Carmela Coyle criticized the policy, stating that Anthem is attempting to force hospitals to solve a problem created by the insurer itself. The association also warned that the reimbursement cuts could add further financial strain to hospitals already navigating rising operational costs and instability throughout the healthcare industry.

Hospital representatives further argue that the policy creates unrealistic administrative expectations. Facilities may be required to determine whether individual patients are Anthem members, review the specifics of their insurance plans, and verify whether physicians involved in treatment are contracted with Anthem before care is delivered.

Anthem Defends the Policy

Anthem and its parent company, Elevance Health, maintain that the policy is necessary to address concerns tied to the federal No Surprises Act. The insurer argues that some providers intentionally remain out of network and use the law’s independent dispute resolution process to pursue higher reimbursement rates for nonemergency services.

According to Anthem, many of the disputed claims involve planned procedures performed in markets where in-network physician options are already available. The company has stated that excessive out-of-network billing increases costs for employers, patients, and health plans, and that the policy is intended to encourage hospitals to reduce these occurrences.

Industry groups, including the American College of Radiology, have strongly criticized the policy, calling it operationally unworkable and harmful to provider organizations.

Potential Industry Impact

The outcome of the lawsuit could have broader implications for hospitals, insurers, and healthcare providers across the country. If Anthem’s policy is upheld, hospitals may face increased pressure to monitor physician network participation and manage payer compliance more aggressively.

At the same time, the legal challenge highlights growing tension between insurers and providers surrounding reimbursement practices and the implementation of the No Surprises Act. As payers continue to reevaluate out-of-network billing policies, healthcare organizations may need to adapt their contracting, documentation, and dispute resolution strategies to protect revenue and maintain compliance.

For providers, the case serves as another reminder of the evolving reimbursement landscape and the importance of staying informed about payer policy changes that could directly impact operations and financial performance.

What This Means for Healthcare Providers

The legal battle between California hospitals and Anthem highlights the growing complexity surrounding reimbursement policies and payer-provider relationships. Healthcare providers may face increased administrative responsibilities as insurers continue introducing policies tied to out-of-network care and dispute resolution.

Hospitals and physician groups could see greater pressure to monitor network participation, strengthen documentation practices, and navigate more detailed reimbursement requirements. Policies like Anthem’s may also lead to additional claim disputes, delayed payments, and operational strain for providers already dealing with financial and staffing challenges.

As payer policies evolve, healthcare organizations must remain proactive in reviewing contracts, identifying reimbursement risks, and maintaining compliance with both state and federal regulations.

How Patriot Group Can Help

As reimbursement policies and payer regulations continue to shift, healthcare providers need experienced guidance to effectively manage claims, reduce financial risk, and improve operational performance.

Patriot Group works with healthcare organizations to address complex payer-related challenges, strengthen revenue cycle management strategies, and support compliance efforts. From identifying reimbursement issues to assisting with claims management and dispute resolution, our team helps providers navigate an increasingly complicated healthcare environment.

If your organization is facing challenges related to insurance reimbursement, out-of-network billing policies, or claim denials, Patriot Group is available to provide support and strategic insight.