DMHC Fines Medi-Cal Insurer for Outsourcing Claims Processing
The California Department of Managed Health Care has fined Care1st Health Plan -- a Medi-Cal managed care insurer -- $120,000 for outsourcing a large portion of its claims processing overseas without notifying the agency and for providing inaccurate information about the policy change, Payers & Providers reports.
Medi-Cal is California's Medicaid program.
About 410,000 state residents are enrolled in Care1st plans, mostly through Medi-Cal and Healthy Families. Healthy Families is the state's Children's Health Insurance Program.
The managed care insurer also covers residents who qualify for both Medi-Cal and Medicare, known as dual-eligibles.
Details of Violation
DMHC records show that the agency discovered during a routine audit that Care1st had outsourced a significant amount of its claims processing.Â Such a change requiresÂ disclosure under the California Health and Safety Code and DMHC approval.
The agency requested that Care1st report the change, and the insurer said that JMS -- a Michigan-based claims processing firm with an affiliate in Montclair, known as JMS Pacific -- was handling the processing.
However, DMHC "determined that ... the entity in which the plan was contracting was a Chinese business that had no direct ties to JMS Pacific," according to agency records.According to Payers & Providers, privacy experts are concerned by the possibility of overseas entities processing U.S. patient claims because such organizations are not required to follow federal HIPAA regulations (Shinkman, Payers & Providers, 3/28). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.