Anthem Blue Cross Fined For Poor Handling Of Consumer Grievances

The Anthem Blue Cross headquarters is seen in February 2010 in Woodland Hills, California. (David McNew/Getty Images)

California’s managed-care regulator Tuesday fined insurance giant Anthem Blue Cross $415,000 for failing to address consumer grievances in a timely manner.

The sanction from the state comes at a delicate time for Anthem, as it tries to quell concerns about its planned $54 billion acquisition of Cigna Corp. and win regulatory approval for the deal.

Anthem Inc., based in Indianapolis, sells Blue Cross policies in California and 13 other states.

The California Department of Managed Health Care said it found 40 cases in which Anthem deprived members of their grievance and appeal rights.

The agency said Anthem must provide a detailed report within 90 days on the actions it has taken to fix these violations.

“The DMHC is committed to protecting the health care rights of Californians,” said Shelley Rouillard, the agency’s director. “The grievance process is fundamental to ensuring members receive needed health care services with their health plans.”

Darrel Ng, an Anthem spokesman, said the company is paying the fine and continues to work on resolving the issue.

“In order to resolve the issues identified by the Department of Managed Health Care, Anthem has provided additional training to its staff and implemented a new tracking system to reduce delays with the grievance and appeals system,” Ng said in an email.

Consumer advocates applauded the enforcement action and noted this is the latest example of the company’s failure to abide by basic consumer protections.

At a DMHC hearing on the proposed Anthem-Cigna merger in March, Tam Ma, a policy counsel with the Sacramento-based consumer advocacy group Health Access, cited Anthem’s handling of grievances as an ongoing problem.

The company has paid more than $2 million in fines for this exact violation since 2011.

“We take this as highly problematic,” Ma told California Healthline Tuesday. “That [Anthem-Cigna merger] proposal is pending right now, and we don’t think they should be allowed to get bigger until they fix these problems.”

Ma said she would expect this issue to be a significant factor when regulators review the merger. There is concern, she said, that if Anthem acquires Cigna, problems such as these would be magnified.

The managed care department said a health plan’s grievance program is critical, so that consumers know they have the right to pursue an independent medical review or file a complaint with regulators if they are dissatisfied with the insurer’s decision.

A strong grievance program can also help insurers to identify systemic problems and improve customer service, the department said.

Anthem has said it expects to close on the Cigna merger later this year, after getting approvals from state and federal authorities.

Rouillard and California Insurance Commissioner Dave Jones held hearings on the deal in March, taking testimony from company officials and from merger opponents who fear the acquisition will lead to less competition and higher premiums.

During her hearing, Rouillard said one of the things the department would be paying close attention to how plans handled grievances and appeals.

Last year, Anthem had to pay the Department of Managed Health Care $250,000 in a separate case for overstating its physician network in policies sold on the Covered California exchange.

The company also had to pay millions of dollars in refunds to customers who had relied on faulty provider directories and incurred unforeseen medical bills from out-of-network providers as a result.

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