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Dignity ends Anthem contract during ongoing dispute 

As of July 16, Central Coast residents insured by Anthem Blue Cross lost in-network coverage at French Hospital Medical Center in San Luis Obispo, Arroyo Grande Community Hospital, and Marian Medical Regional Center in Santa Maria, which are part of the nonprofit Dignity Health system.

"Dignity Health and Anthem Blue Cross have been negotiating new contracts in good faith for six months," Dignity Health Medical Foundation President/CEO Dr. Robert Quinn said in a statement emailed in response to questions from New Times. "We remain in active discussions and hope to reach a responsible new agreement soon that will protect patients' access to the care they need."

click to enlarge NOT COVERED As of July 16, Anthem Blue Cross stopped covering Dignity Health care facilities such as French Hospital Medical Center. Contract negotiations between the insurance company and health care system are ongoing. - FILE PHOTO BY JAYSON MELLOM
  • File Photo By Jayson Mellom
  • NOT COVERED As of July 16, Anthem Blue Cross stopped covering Dignity Health care facilities such as French Hospital Medical Center. Contract negotiations between the insurance company and health care system are ongoing.

In the meantime, an Anthem spokesperson said, patients can still access Dignity Health facilities for emergency medical services, as those are always considered a covered health benefit. Anthem is also providing transition assistance to those who are pregnant, are undergoing a course of treatment, or have prior authorization for Dignity Health Services to ensure a continuum of care.

Anthem said it's continuing negotiations with Dignity to reach an agreement that brings the nonprofit health care provider back into its insurance network.

"The problem is Dignity's rates are sometimes the highest among all health systems in California, making it almost 30 percent more expensive than other health systems in the state," Anthem's spokesperson said. "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."

According to previous New Times reporting ("Big Health: A look at how the Central Coast's two hospital systems shape local health care costs," July 30, 2020), Dignity Health hospitals on the Central Coast set their prices about five times higher than what Medicare determined their costs to be in 2017. However, for-profit Tenet Healthcare's Central Coast hospitals' prices were even higher than that, at more than seven times the Medicare determined costs.

Health care experts told New Times that integrated health care systems such as Dignity and Tenet use market leverage to receive higher reimbursements from private insurance providers.

In an April post on the California Medical Association's (CMA) website, the CMA said that the contract dispute between Dignity and Anthem came "on the heels of a similar contract renegotiation involving Dignity and Aetna." Dignity and Aetna insurance company reached a three-year agreement in April that resulted in no lapse in coverage.

On Jan. 1, 2020, Dignity's contract with Cigna insurance company in California expired, leaving thousands without in-network coverage at Dignity Health centers.

Cigna told the Ventura County Star that Dignity wanted Cigna customers to pay "more than what is normal in the region." At the time, Dignity Senior Vice President for Payer Strategy and Relationships Tammy Wilcox told the Star: "At a time when many nonprofit community hospitals are struggling, Cigna is making billions of dollars in profits each year. ... Yet Cigna is demanding that it pay local hospitals even less."

Dignity and Cigna eventually reached an agreement announced in September 2020 that returned the nonprofit system to Cigna's network as of July 1, 2020.

In the statement Dignity sent to New Times, President/CEO Quinn said that the nonprofit offered Anthem a proposal with rates that don't even cover hospital inflation costs and are below increases included in prior agreements.

"Dignity Health is a nonprofit health care system and California's largest Medicaid provider and has lost money in recent years, while Anthem is a for-profit insurance company that earns billions of dollars in profits," Quinn said.

Anthem told New Times that it recognizes the fact that costs do increase, which is why it's offered Dignity increases over current rates. But, it doesn't believe Anthem members should pay "substantially more for health care at Dignity," adding that the majority of its customers are on self-funded plans that pay for medical costs directly.

"That's why we continue to work with Dignity in addressing the high prices it charges so we can protect affordability, and ensure quality for consumers," Anthem's spokesperson said. Δ

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