California Seeks Fines, Penalties Against Insurers for Claims Processing Violations

In a California Healthline Special Report, Cindy Ehnes, director of the Department of Managed Health Care, and Santiago Munoz, associate vice president of clinical services for the UC Health System discussed the state’s investigation into health insurers’ claims processing procedures.

After a joint investigation with the Department of Insurance, DMHC is seeking millions of dollars in fines against PacifiCare and its parent company, UnitedHealthcare, for claims that the insurer allegedly paid late or did not pay at all. The investigation found that PacifiCare improperly denied more than 30% of claims, Ehnes said.

“It may sound like they just made a mistake, but in reality, that’s what an insurance company is set up to do is pay claims,” Ehnes said, adding, “And so when your primary function has an error rate of up to 30%, you have a very serious problem, and it is one that we take very seriously and we want the company to take very seriously as well.”

PacifiCare said the problems resulted from a slow transition after it was acquired by UnitedHealthcare in late 2005. The company has since taken steps to correct the problems, according to a statement.

At UC, the mishandled payments were beginning to affect the health system’s ability to operate, Munoz said. The experience will affect how UC handles its insurance contracts in the future, he said (Kennedy, California Healthline, 2/11).

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