The California Medical Association (CMA) has formally signed on to a national letter opposing Elevance Health’s upcoming “Facility Administrative Policy: Use of a Nonparticipating Care Provider.” The policy, effective Jan. 1, 2026, is in 11 states but not yet active in California, and would impose a 10% administrative penalty on hospital facility claims whenever out-of-network physicians participate in patient care.
Beyond the penalty, the policy signals that hospitals “may be terminated from the network” if they continue using non-participating providers. Physician groups argue that this approach undermines federal protections established under the No Surprises Act, which protect patients from surprise billing and preserve negotiated mechanisms for resolving out-of-network payment disputes.
CMA and its partners highlight two significant risks:
Hospitals, unable or unwilling to absorb a 10% cut, may shift costs to physicians or force them to join networks on less favorable terms—accelerating consolidation and reducing independent practice viability.
In underserved, rural, or remote regions, hospitals often rely on a mix of in- and out-of-network physicians to maintain coverage. The policy could limit the availability of specialists and delay patient care.
The letter urges Elevance Health to drop the policy and instead adopt practices that promote fair contracting, reduce administrative burden, and safeguard robust provider networks and patient access. CMA will continue monitoring the situation and advocating on behalf of California physicians and their patients.
The California Medical Association has joined other physician groups in urging Anthem Blue Cross-parent Elevance Health to rescind a policy that would penalize hospitals for allowing out-of-network physicians to deliver care.