Calif. fines seven health plans

California regulators have fined seven leading health plans nearly $5 million total for claims payment violations (PDF).

The health plans also must provide restitution to hospitals and doctors for delayed and underpaid claims going back two to three years, which could reach tens of millions of dollars, according to the California Department of Managed Health Care, which oversees HMOs and issued the fines. Insurers must also change their claims paying practices.

Anthem Blue Cross, a WellPoint subsidiary, and Blue Shield of California, a not-for-profit independent insurer, each were fined $900,000; UnitedHealth Group/PacifiCare was fined $800,000; Health Net and Kaiser Foundation Health Plan each were fined $750,000; Cigna was fined $450,000; and Aetna was fined $300,000, for a total of $4.85 million.

“California hospitals and physicians must be paid fairly and on time,” Cindy Ehnes, director of the Department of Managed Health Care, said at a news conference.

An 18-month state investigation found that all seven plans were in violation of a legal requirement to pay 95% of claims correctly. Five of the plans also violated dispute resolution procedures.

“One hospital executive told me, ‘I regard a claim with a health plan as a ticket to chase those dollars,'” Ehnes said. “That is unacceptable to the department.” She added that she expected hospitals to get 70% of the restitution for outstanding claims, and physicians to receive 30%, because the bulk of patient expenses occur in hospitals. The department will conduct follow-up audits.

In a statement, Patrick Johnson, president and CEO of the California Association of Health Plans, said that “we have long recognized that the administrative side of healthcare coverage can take valuable time away from patient care, which is why plans have been working to streamline processes both at the health plan level and in doctors' offices.”