Reimbursement disputes between payers and providers happen all the time: UnitedHealthcare versus Envision, Aetna versus Lehigh Valley Health Network. But what’s different about the recent spat between Carbon Health and Anthem Blue Cross of California is that Carbon Health chose to take it public, one expert said.
Carbon Health, which is based in San Francisco and recently received a $100 million investment from CVS Health, offers virtual and in-person primary and urgent care. It went out of Anthem Blue Cross’ network March 17 after failing to come to an agreement on reimbursement. In an April 29 blog post, the company publicly criticized Anthem saying that the insurer did not want to pay Carbon Health providers “livable wage.”
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These kind of disagreements are common, but in this case, Carbon is gaining more media attention than most, said Nathan Ray, partner of consulting firm West Monroe. The company declined to say whether Anthem Blue Cross of California is a client.
“The boundary line in payer/provider contracting is always fraught and I don’t think a provider has ever felt that they had an enormously fair reimbursement rate with large payers. That’s the core of the conflict within those entities within our health system,” Ray said in an interview. “The fact that Carbon has a media microphone and a brand and the ability to talk about things like living wage as a concept to change the picture of [not being able to] get a contract they wanted with Anthem, doesn’t make this different or special.”
On Thursday, a tweet from a Carbon Health employee stated that Anthem paid $300 for an urgent care visit with another provider but paid Carbon $100 for the same visit.
“Carbon Health employs hundreds of healthcare workers in California, and thousands across the country – people who deserve a livable wage for the accessible, high-quality care they provide to their communities seven days a week,” a Carbon spokesperson told MedCity.
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A spokesperson at Anthem Blue Cross fired back that “Carbon continues to insist on excessive rate increases, which would result in higher costs for the people and businesses we serve,” in a statement to MedCity News.
The dispute goes beyond just the reimbursement rate.
In its blog post, Carbon Health also said that it submitted Anthem member claims for out-of-network processing, but that Anthem has denied “every single claim and has so far refused to reimburse us for this care.” Since the initial blog post, Carbon provided an update Monday that Anthem is now processing those claims and many patients are receiving reimbursements for their visits with Carbon.
To Ari Gottlieb, principal of A2 Strategy Corp., the dispute and Carbon’s decision to take it public is showing the uneven power balance between the two companies. Gottlieb used to have a business relationship with Anthem, but hasn’t had a relationship with the organization in over four years.
“This is likely that Carbon is really hurt much more by not being in network with Anthem than Anthem is being hurt by not having Carbon in there. There’s likely no right or wrong. It’s a dispute around payments and outcomes and Anthem has decided that clearly they’re unable to reach terms that are relevant for them … [Carbon is] trying to assert themselves to be more important,” Gottlieb said. “My guess is that this has gotten more play than your typical urgent care center chain going out of network because I think people have been fascinated in some ways by Carbon. It’s one of these startup, tech-enabled businesses.”
Making the failed negotiations public seems to be related to an inflated sense of who they are, he suggested.
“It’s almost the arrogance of Carbon Health,” Gottlieb said. “Which is somewhat representative of a number of these relatively new startup healthcare companies. They think that they’re so integral to the system. … It’s a company that thinks that they’re more important than they actually are. You see it with a bunch of these media-forward [companies]. They claim they’re tech-enabled startup companies that have actually just really struggled. They think that they’re a much more critical part of the system. … The healthcare system in California doesn’t break down if Carbon disappears.”
Carbon claimed in its blog post that its providers are getting reimbursed less than what Anthem pays other urgent care and primary care providers in California. However, this argument doesn’t seem entirely believable to Gottlieb.
“Then the question becomes, why? Why is Anthem singling out Carbon? It doesn’t make sense to me,” he said. “Yes, I’m sure there’s some that they pay more to. There’s also probably some that they pay less to. I can’t come up with a reason as to why Anthem would just pay Carbon less than everyone else providing equivalent services.”
CMS data that Carbon shared with MedCity News shows that for new patient office or other outpatient visits, Anthem pays $280 to $350 to large delivery systems and $165 to $195 to independent provider groups. Medicare pays providers $132 for this service. Carbon said that Anthem pays its providers below what Medicare pays for this service, though didn’t share the exact amount.
“Elevance/Anthem chooses to pay Carbon Health less than Medicare for most of our services – where even a meaningful increase to our reimbursement rates would not have brought us in line with what Anthem currently pays other urgent care and primary care providers in California,” the Carbon spokesperson said. Anthem Blue Cross is part of Elevance Health.
Who’s right in this argument? It’s hard to really say. But it ultimately will affect the patients the most, Ray of West Monroe said.
“For some period of time it’s going to be out of network and it’s going to cost more and that hits home much more specifically than the context of social rightness. … There’s aspects of this that don’t need emotion or social justice,” he said. “They can be dollars and cents and I can completely reason and agree with some of the arguments [Carbon is] providing. The problem is, is that enough for all of this and potentially impacting patients?”
While it is true that difficult contract negotiations are common in the historically fraught relationship between payers and providers, it’s also true that providers are financially much more strained in the post-pandemic world. Meanwhile payers have record profits.
Photo: claudenakagawa, Getty Images
