When health insurer Anthem decided to limit the length of anesthesia during surgery that it would cover, it became a scandal as outrage poured in at a time when resentment towards health insurers was already particularly visible. Anthem quickly canceled that policy, due to “significant widespread misinformation” about the policy. 

The Anthem policy would actually not have left patients on the hook for anesthesia bills. In-network doctors are not allowed to bill patients beyond the price agreed to with the insurer (except for things like co-pays).

The bills that Anthem wouldn’t cover under the now-canceled policy would have been eaten by anesthesiologists. And there is where this row represents an ongoing and sometimes bitter conflict between insurers and health care providers.

“There’s sort of an ongoing cat-and-mouse game between providers and insurers,” said Matthew Fiedler, a senior fellow at the Brookings Institution. The price an insurer pays for anesthesia, or an MRI, or anything, is negotiated with large health care providers or groups in contracts that are revisited periodically. In this case, Fiedler said Anthem wasn’t waiting for a new contract.

“Anthem is trying to find a way to cut the prices it’s paying to anesthesiologists between contract negotiations,” he said.

Anthem declined an interview request, but the company said in a statement that it was only trying “to clarify the appropriateness of anesthesia consistent with well-established clinical guidelines.” Whatever the intention, many anesthesiologists took the policy as an insinuation they were making surgeries last longer than necessary. 

“That’s controlled by the surgeons,” said Steven Shafer, professor emeritus of anesthesiology at Stanford, “and the idea that in some way we’re going to slow-walk a procedure is insane.” 

If anything, he added that the pressure is on to make procedures go quickly to make time for the next one.  

This particularly bitter episode is emblematic of broader, ongoing tension between insurers and health care providers over how much health care should cost.  

“We’ve seen an arms race on both sides,” said Larry Levitt, executive vice president for health policy at KFF.

Each side is always looking for more leverage, and one way to get leverage is to get big. “There’s been consolidation in the insurance market, leading to bigger and bigger insurance companies, but there’s been consolidation on the hospital side — you know, merging with other hospitals — becoming bigger systems.” Some insurers have become providers themselves, buying up physician groups.

“Private equity now, like Wall Street, is now getting into the purchasing of providers,” said Sabrina Corlette, a research professor at Georgetown’s Center on Health Insurance Reforms. “For example, many anesthesia practices are owned by private equity firms.”

Corlette said that in this consolidation arms race, insurance companies do not always have the upper hand — “not at all,” she said.

However, there is another battleground between insurers and physicians, Corlette noted, where insurers do loom large — and it’s very visible at the doctor’s office. 

“You may have heard the term ‘prior authorization,’ so to try to constrain costs,” she said. “They may require physicians to request approval in advance of delivering a service.”

Doctors say this creates a major bureaucratic hassle and cost for them.

“I’m constantly needing to convince [insurers] that something that’s been ordered for a patient in my clinic should be paid for,” said Dr. Pamela Flood, who practices pain medicine at Stanford.  “It’s very adversarial.”  

The process can be costly, said Don Arnold, president of the American Society of Anesthesiologists. “Every time you need to appeal documentation that is provided in anesthesia patient care that’s provided, there’s an administrative cost associated with that, and it impacts cash flow on both hospitals and physician practices that are frankly in more tenuous circumstances now in the post-COVID environment than perhaps was true prior to COVID.”

This tug-of-war between health care providers and insurers is theoretically meant to keep a lid on health care costs, but many experts say it does not.

“There’s a couple of reasons for that,” said Corlette. One is the consolidation war; the other is that “the insurance companies are largely middlemen, and they get a cut of the cost no matter what and they just pass that on to employers, who are the largest source of insurance for American policy holders.”

“This is the system we have for dealing with health care costs,” said KFF’s Larry Levitt. “But it’s not working so well.”