Sonoma Valley Hospital Finalizing Contract With Anthem

Sonoma Valley Hospital continues to finalize a contract that will provide the hospital with higher reimbursement rates for patient services and enable its patients to remain in network with Anthem Blue Cross.

“As with all contracts, the details must be worked out,” said John Hennelly, president and CEO of Sonoma Valley Hospital. “We have extended the existing contract through April to finalize things.”

All the hospital’s patients with Anthem Blue Cross coverage (including Anthem PPO, Anthem HMO and Anthem Medicare) will remain in contract with the insurer throughout the process.

“We are grateful that Anthem members in our community can now have peace of mind and can continue accessing Sonoma Valley Hospital without any further disruption,” Hennelly said. “We got a deal done that is a plus not only for Sonoma Valley Hospital, but for our community as well.”

The new contract will become effective on May 1, 2024, and run through April 30, 2028.

Hennelly previously stated that under the existing contract, Anthem was reimbursing the hospital for patient services at 2013 rates, with no adjustments. As recently as late February, he said that the hospital and Anthem were far apart in negotiations for a new contract.

“Both sides were forced to make concessions,” he said. “The new agreement (which was announced on Friday, March 29), will certainly be an improvement over our existing arrangement. Financially, we still have lots of work to do on this contract in order to get our rates where we feel they need to be, but this is a step in the right direction. The rates bring us up to a more sustainable level for the hospital.”

He said that annual reimbursement increases from Anthem are likely to be included in the contract.

An Anthem Blue Cross spokesperson declined to comment on the contract, but a posting on the company’s website on May 1 states, “ Anthem Blue Cross is pleased to announce that Sonoma Valley Hospital has rescinded its notice of termination while they finalize the renewal agreement effective May 1, 2024. The current contract remains in full force and effect.”

Sonoma Valley Hospital provides services to more than 1,500 Anthem members each year. They comprise approximately 4,000 of the estimated 50,000 patient visits per year at the hospital.

The hospital provides services to some 12,000 commercial patient visits per year. Roughly 3,200 of them involve Anthem members, making it the largest commercial payer.

During the negotiations, which were extended to March 1 and then April 1 because no contract was achieved, many Sonoma Valley Hospital patients with Anthem Blue Cross coverage were concerned that no contract would be reached. This would have presented them with several options, such as retaining their Anthem coverage and paying more for nonemergency services at the hospital; switching to another insurer; or opting for another nearby hospital that accepts Anthem insurance.

“We received a lot of input from people who would have been impacted by a contract termination,” Hennelly said. “Fear, anger, indignation, hope, hopelessness and support, to name a few.”

Hennelly held an online town hall meeting on Feb. 28 to address questions and concerns about the situation.

He said that some of the hospital’s patients switched to another managed care plan, but that they will be able to re-enroll with Anthem during the next open enrollment period.

Hennelly is thankful to the Sonoma Valley community for supporting the hospital through the negotiation process.

“Anthem is a huge company,” he said. “They measure their operation in billions. They report profits of $4 billion to $6 billion per year while we work to simply have enough money to cover our expenses. They contract with hundreds of thousands of providers and hospitals across the country, while we might have a dozen insurance contracts.

“Having the community’s support, voicing that support, really helps when the hospital faces these types of negotiations.”