Iowa Governor Signs ASA/ISA Endorsed Out-of-Network Penalty Protection Legislation

Iowa Governor Kim Reynolds has signed House File 2635 into law, prohibiting insurance companies from penalizing facilities that choose to work with out-of-network health professionals. The legislation directly addresses policies like Anthem Blue Cross Blue Shield’s, which reduce facility payments by 10% when any services are furnished by out-of-network clinicians.

Endorsed by the American Society of Anesthesiologists (ASA) and the Iowa Society of Anesthesiologists (ISA), the law ensures:

• No retaliation: Health carriers may not penalize, reduce payments to, or remove facilities or clinicians from networks for working with or referring to out-of-network health professionals.
• Clinical autonomy protected: Carriers may not interfere with facility or clinician decisions regarding staffing or referrals (except where otherwise permitted by law).
• Fair contracting requirements: Carriers must offer facilities and clinicians an opportunity to negotiate before imposing or modifying contract terms.

ASA has led a national effort to push back against these types of payer policies, including direct engagement with insurers and advocacy for stronger congressional oversight of practices that undermine patient access and care delivery. Policies that penalize hospitals for working with out-of-network clinicians can create significant pressure on facilities to require anesthesiology groups to join a payer’s network—even when proposed contract terms are neither fair nor sustainable. This dynamic threatens independent physician practices by eroding negotiating leverage and forcing acceptance of reduced payment rates simply to help hospitals avoid financial penalties.

House File 2635 helps restore balance by protecting facilities and clinicians from these coercive tactics and preserving patient access to medically appropriate care.

The law takes effect July 1, 2026.

For more information on ASA’s efforts to address harmful insurance practices, visit ASA’s advocacy resources.