Regulators Impose Nearly $5M in Fines on State’s Largest HMOs
On Monday, the California Department of Managed Health Care announced nearly $5 million in fines against the state's seven largest HMOs for failing to properly pay numerous medical claims over the past three years, the Los Angeles Times reports.
The state imposed the fines after conducting an 18-month investigation of the insurers' payment practices.
In addition to the fines, insurance regulators said the health plans will pay "tens of millions of dollars" to compensate health care providers whose claims were underpaid or improperly declined.
Details of the Fines
State officials determined the size of the fines based on each insurer's patient volume in California and the severity of its violations (Helfand, Los Angeles Times, 11/30). DMHC issued a total of $4.85 million in penalties to:
- Anthem Blue Cross, which received a $900,000 fine;
- Blue Shield of California, which received a $900,000 fine;
- UnitedHealthcare/PacifiCare, which received a $800,000 fine;
- Health Net, which received a $750,000 fine;
- Kaiser Foundation Health Plan, which received a $750,000 fine;
- Cigna, which received a $450,000 fine; and
- Aetna, which received a $300,000 fine (Kleffman, Contra Costa Times, 11/29).
State auditors said the seven insurers' average payment accuracy was about 80%, compared with the 95% payment accuracy rate mandated under state law.
Auditors also found that several of the insurers often failed to follow state-mandated procedures for resolving payment disputes (Calvan, Sacramento Bee, 11/30).
Cindy Ehnes, director of DMHC, said she does not expect health plans to appeal the fines because the penalties were negotiated in advance. The insurers will be required to submit a plan to address the payment problems.
Blue Shield officials said the organization is working to improve its procedures for processing claims (Colliver, San Francisco Chronicle, 11/30).
A Kaiser spokesperson said the health plan has taken steps to boost the speed and accuracy of its claims processes.
Aetna acknowledged problems with its payment procedures and said it took action to address the issue after state officials informed the health plan of the audit's findings.
The California Association of Health Plans said the penalized insurers would work with regulators to resolve performance issues. CAHP also noted that the HMOs generally met state requirements for timeliness of paying claims (Los Angeles Times, 11/30).
For more coverage of DMHC's fines, see today's Capitol Desk post.
Headlines and links to other coverage of DMHC's fines are provided below.
- "CA Slaps Health Plans for Delaying Payments" (Clark, HealthLeaders Media, 11/30).
- "State Fines Health Care Insurers $4.85 Million" (Howard, Capitol Weekly, 11/29).
- "State Fines Seven Health Plans Nearly $5 Million" (Lavelle, San Diego Union-Tribune, 11/29).
- "California Health Insurers Are Punished With a Fine of Nearly $5 Million" (Lin, Los Angeles Daily News, 11/29).
- "Calif. Regulator Fines Insurers for Underpayment" (Mohajer, AP/Bloomberg BusinessWeek, 11/29).
- "State Fines HMO Plans for Bad Payments" (Perkes, Orange County Register, 11/29).
- "State Fines Major California HMOs $4.85M" (Rauber, San Francisco Business Times, 11/29).
- "California Health Providers Slapped With Big Fines" (Robertson, Sacramento Business Journal, 11/29).
- "Calif. Fines Seven Health Plans" (Vesely, Modern Healthcare, 11/29).
Headlines and links to broadcast coverage of the fines are provided below.
- "State Fines 7 Health Providers for Late, Improper Claims Payments" (Watt, "KPCC News," KPCC, 11/29).
- "State Regulations Slap HMOs with $5 Million in Fines" (Goldberg, "KPBS News," KPBS, 11/29).