State fines 7 health providers for late, improper claims payments

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The California Department of Managed Health Care has issued nearly $5 million in fines for seven health providers that weren’t meeting a legal requirement to pay claims promptly and correctly.

Too little, too late — or both. That’s how a state agency says California’s seven largest health plan providers pay some claims filed by doctors and hospitals. Now, those providers have to pay nearly $5 million in fines.

For a year and a half, the California Department of Managed Health Care has been investigating the way health insurers pay claims. It found that seven health providers — including Anthem Blue Cross, Blue Shield of California, United/PacifiCare, Healthnet, Kaiser Foundation Health Plan, Aetna and Cigna — weren’t meeting a legal requirement to pay 95 percent of claims promptly and correctly.

"Our clear and consistent message has been that California’s hospitals and physicians must be paid fairly and on time," said the department's director Cindy Ehnes. " Providers are struggling to stay afloat as small businesses in a very difficult business environment and with high deductible products that leave them very dependent on consumers paying an increasing load."

Ehnes said the improper payment of provider claims runs the risk that the health care delivery system in the state of California will "grind to a halt."

The insurance companies negotiated the terms of the fines. Anthem Blue Cross and Blue Shield of California each have agreed to pay $900,000 fines. United/Pacificare is being fined $800,000; HealthNet and Kaiser Foundation Health Plan are being fined $750,000 each. Cigna is being fined $450,000; and Aetna is being fined $300,000.

The companies must also pay restitution to the doctors and hospitals, with penalties and interest. That’s expected to total tens of millions of dollars.

Doctors and hospitals can dispute underpayments or claims denials, but the Department of Managed Health Care says only two of the seven health insurers followed dispute resolution procedures. The two that handled disputes correctly were Anthem and Blue Shield.

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