California Regulators Set To Announce Record Fine for UnitedHealth
The directors of the Departments of Managed Health Care and Insurance are set to announce major fines and other penalties against UnitedHealth Group on Tuesday for improper claims processing and problems with payments to doctors by its PacifiCare subsidiary, the San Francisco Chronicle reports.
Cindy Ehnes, director of DMHC, is expected to announce a $3.5 million fine against PacifiCare for problems with its HMO products in California. It will be the largest fine DMHC has ever issued.
Meanwhile, Insurance Commissioner Steve Poizner (R) could seek penalties ranging from $650 million to $1.33 billion.
Doctors had complained of:
- Claims being improperly denied;
- Late payments;
- Delays resolving problems; and
- The insurer not acknowledging that claims were received.
An investigation by the insurance department alleged that in 133,000 instances, claims were processed improperly in 2006 and 2007. PacifiCare processed about 1.1 million claims during that period.
In addition, DMHC concluded that the health plan improperly denied HMO claims 30% of the time and that 29% of claims disputes were handled incorrectly.
California regulators said the company did not have adequate staff to process claims or address disputes effectively (Colliver, San Francisco Chronicle, 1/29).
Company officials said the problems stemmed from snags integrating PacifiCare and UnitedHealth after the January 2006 merger.
David Hansen, the regional CEO for UnitedHealth, said that the company tried to achieve too much in a short period of time during the merger and that the loss of a contract with a 9,000-physician group in California raised other problems.
Company officials said most of the problems were administrative and did not affect patient care. Officials also said the majority of PacifiCare members belong to HMOs, while the problems were found primarily in PPO and point-of-service plans (Girion, Los Angeles Times, 1/29).
Insurance department officials said each case would have to be proved in an administrative hearing (San Francisco Chronicle, 1/29).
PacifiCare officials expect the Insurance Department penalties to be significantly less than the $1.33 billion maximum, highlighting the company's cooperation with California regulators.
UnitedHealth spokesperson Tyler Mason said the company identified many of the problems and raised them with regulators. He also said that the company is hiring 50 additional staff members to help address lingering payment problems and improve physician services (Los Angeles Times, 1/29).