UnitedHealth Group and Aetna have agreed to reconsider some denied claims that date as far back as 1994, after New York regulators fined the nation's two largest health insurers a combined $2.5 million for failing to properly inform members about their right to appeal decisions.
The agreement, forged last month, marks a new direction for regulators in their ongoing efforts to clamp down on pervasive claims-handling problems among health plans. While several states have imposed financial penalties on HMOs that violate payment laws, the New York State Insurance Department's deal with Aetna and UnitedHealth goes a step further by requiring the insurers to remedy the situation with their members.
"This agreement is indicative of the department's creative new approach to health insurance regulation in an effort to make enforcement actions more meaningful for policyholders," New York Insurance Superintendent Gregory Serio said in a written statement.
The move comes just six months after the state attorney general's office released a report that identified and proposed solutions to the most common managed-care problems faced by New Yorkers. "Insufficient knowledge of consumer appeal procedures" was among the top four complaints voiced by plan members.
Regulators fined Aetna, Hartford, Conn., $1.5 million after a routine market survey found the insurer had failed to include any information about its appeals process in explanations accompanying claim denials from July 1, 1994, to July 31, 2001. UnitedHealth, Minneapolis, was fined $1 million for referring members to their handbooks instead of including information on claims denied from July 1, 1994, to Dec. 3, 2001.
The insurers have since launched an appeals process for members whose claims were either fully or partly denied during these periods. Aetna also agreed to re-examine certain claims it denied from Jan. 1, 2000, to Sept. 30, 2001, after the insurance department cited it for "serious inadequacies" in its claims-processing system.
How many members would be affected is unknown. At the end of 2001, Aetna had 747,000 members in New York, while UnitedHealth had 186,300.
Neither company is new to state penalties. Last September, Maryland's insurance commissioner fined Aetna and UnitedHealth $850,000 and $300,000, respectively, for failing to process provider claims within the required 30 days and failing to pay interest on late claims, among other violations. And in August 2001, the Texas Department of Insurance fined UnitedHealth $1.25 million for failing to pay medical claims on time.
The companies' agreement with New York regulators gives them an opportunity to somewhat repair their public image. Both insurers have taken out advertisements in area newspapers to reach members who may want to have their denied claims reconsidered.
"Aetna takes seriously the findings of the New York Department of Insurance," Aetna said in a written statement. "Aetna fully understands the importance of accurate and timely claims processing."