Maryland's insurance commissioner has fined a health plan $100,000 for arbitrarily and routinely reimbursing a physician less than he deserved for care represented in bills for payment.
The commissioner also forced NYLCare Health Plan of the MidAtlantic to hire a compliance officer to ensure that the "downcoding" of legitimate claims doesn't happen again.
The government action, announced late last month, is a twist on the usual issue involving coding of provider claims for reimbursement of services.
Government enforcers primarily investigate "upcoding," whereby providers are accused of billing Medicare or private insurers for a higher intensity of care than is merited.
In the Maryland case, the insurance administration investigated a physician's complaints that 45 individual claims had been downcoded to a lesser intensity of services. For example, a claim was reduced to a routine office visit when additional activities took place or more than the usual time was spent with a patient.
NYLCare officials said the claims were downcoded because of insufficient supporting information for the higher reimbursements. But investigators found that all 45 claims were backed by properly submitted documentation, the administration said.
NYLCare waived its right to a hearing and agreed to terms of a consent order in which it resolved to end "arbitrary and capricious" downcoding.
Along with providing a compliance plan and hiring a compliance officer, the insurer agreed to submit a written report by July 1 and every three months for the next year summarizing the officer's activities to increase compliance with all state laws and regulations. It was the first time the state insurance administration has directed an HMO to hire a compliance officer, a spokeswoman said.
NYLCare has had other scrapes with Insurance Commissioner Steven Larsen in the past two years. The plan was fined $127,000 in March 1998 for using unlicensed agents, failing to track and pay interest due on claims and using forms that had not been approved by the insurance administration.
Two months later, the administration ordered the insurer to pay $250,000 in medical expenses it had denied. And in January, the insurance administration fined NYLCare $40,000 for failing to comply with a 1997 Maryland law that requires HMOs and insurers to authorize 90-day supplies of maintenance drugs.
Hartford, Conn.-based Aetna U.S. Healthcare acquired NYLCare of the MidAtlantic's parent, New York-based NYLCare Health Plans, in July 1998 for $1.05 billion. In imposing the fine, Larsen applauded Aetna's cooperation. He will allow half the fine to be suspended if the insurer complies with the consent order during the 12-month term.