Anthem Blue Cross and Blue Shield, which had threatened to drop New Milford Hospital as a primary source of medical care, has successfully negotiated a new contract with the hospital.

Anthem president David Fusco and Dr. John Murphy, president and chief executive officer of Western Connecticut Health Network, which now operates New Milford Hospital, said the agreement "allows us to continue our valuable relationship.''

"We are pleased to have reached an agreement that recognizes and promotes the ongoing quality and safety achievements of New Milford Hospital,'' the statement said.

As part of the agreement, New Milford Hospital will continue to participate in the Anthem Quality-Insights hospital initiative.

The program is designed to measure health care quality and improve patient safety.

Earlier this month, Anthem mailed letters to its customers in the Greater New Milford area, cautioning unless a new agreement could be reached with Western Connecticut Health Network, the insurance carrier would drop New Milford Hospital as a primary carrier.

That, in turn, would mean costs of routine medical care at the hospital would increase for people enrolled in Anthem, the state's largest health insurance provider.

Anthem now says the letters were likely looked upon as a negotiating tactic, rather than an actual warning.

Kim Hostetler, vice president of communications for the Connecticut Hospital Association, said last week it is now "pretty much standard operating procedure'' for Anthem Blue Cross and Blue Shield to send out such letters to its customers.

Hospitals are already feeling pressure from Medicare and Medicaid, which are cutting reimbursements, Ms. Hostetler said. "Now the push is coming from private insurers."

This could lead to hard and protracted negotiations, Ms. Hostetler added.

Danbury Hospital, which is allied with New Milford Hospital under the aegis of Western Connecticut Health Network, still has more than a year to go on its contract with Anthem, according to hospital spokeswoman Diane Burke.