Anthem Blue Cross of California is bringing its hospital penalty policy to California on June 1, 2026. The policy has been in effect since January 1 across ten other states: Colorado, Connecticut, Georgia, Kentucky, Maine, Missouri, Nevada, New Hampshire, Ohio, and Wisconsin. Indiana, where Elevance is headquartered, passed legislation banning it. The Senate voted 49 to 0 and Governor Mike Braun signed it into law. Shortly after, Elevance announced the California expansion anyway.

California hospitals are receiving notices now. Any facility that allows an out-of-network provider to treat an Anthem patient enrolled in a self-funded plan will face a 10% reduction on its facility claim starting June 1. Anthem has reserved the right to terminate hospital contracts for continued noncompliance. Hospitals cannot pass the penalty to patients.

How the California Policy Works

The policy applies only to members enrolled in self-funded plans, including administrative services only arrangements. Self-funded plans are governed by ERISA, which preempts state insurance law. That means California’s existing surprise billing protections under AB 72 do not apply to these patients. Fully insured California plans are subject to state insurance regulation, which limits what Anthem can do there. The self-funded carve-out is where Anthem has authority to act, and that is what this policy targets.

The exemptions mirror those in other states. Emergency care, situations where no in-network alternative exists, rural, critical access, and safety-net hospitals, and cases where Anthem has granted prior authorization for out-of-network care are all excluded.

Scheduled procedures at in-network facilities are not excluded. That is the scenario affecting most out-of-network surgical specialists, anesthesiologists, IONM providers, and assistant surgeons.

What the Data Shows

Elevance frames this as a response to IDR abuse, arguing that providers are using No Surprises Act arbitration for elective procedures Congress never intended to cover. The California Medical Association and a national federation of provider organizations have called on Elevance CEO Gail Boudreaux to rescind the policy, arguing it circumvents the IDR process by pressuring hospitals to do Anthem’s contracting work for them.

The IDR data does not support Elevance’s position. Providers have been winning approximately 85% of cases that reach arbitration, with median payment determinations reaching three to four times the qualifying payment amount. Arbitrators are consistently finding that Anthem’s initial offers fall well short of fair reimbursement. The penalty policy is designed to reduce the number of claims that get there.

What This Means If You Practice Out-of-Network in California

The June 1 date is close. Hospital administrators receiving these notices know the math. The pattern from the original ten states is consistent. Some hospitals restrict operating room access for out-of-network providers, others approach those providers about rapid network contracting. Providers who are unprepared end up reviewing contracts under time pressure, with limited ability to negotiate.

If you have outstanding Anthem claims from California patients that are still within the arbitration filing window, those should be reviewed now. Your leverage as an independent out-of-network provider is different from your leverage once you are in-network.

If a California hospital approaches you about joining Anthem’s network in response to this policy, we can help you understand what your claims are worth before you sign. Rapid credentialing timelines are designed to compress your decision window. The rates Anthem offers in exchange are unlikely to reflect what arbitrators have been awarding.

Talk to Us

Minevich Law Group represents out-of-network providers in No Surprises Act arbitration nationwide, including federal IDR cases in all 50 states and state surprise billing arbitration in New York and New Jersey. If you practice out-of-network in California or any other affected state, we can review your recent claims, identify what is still eligible for arbitration, and explain your options before your deadlines pass.

Call 516-202-2196 or schedule a free consultation.