California's seven largest health insurers face nearly $5 million in fines for failing to pay hospitals and physicians fairly and on time, following an 18-month audit by a state regulator, an official said Monday.
Improper claim payments are burdening health providers as they struggle to stay afloat in a bad economy, California Department of Managed Health Care Director Cindy Ehnes said.
"If providers are not paid, patient care and access suffers," Ehnes said. "The insurance companies in this state must pay their fair share of their claims promptly, fairly and on time."
Audits ordered by Ehnes in 2008 found seven health plans weren't meeting a legal threshold of paying 95 percent of claims correctly. On average, plans paid about 80 percent of claims correctly, Ehnes said.
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.
Additionally, insurers will have to pay an uncapped amount of restitution to hospitals and health providers, which is expected to cost tens of millions of dollars, Ehnes said.
The fines and corrective actions have been negotiated and agreed upon with the insurers, officials said. Insurers also face a follow-up audit.
Nicole Kasabian Evans, a spokeswoman for the California Association of Health Plans, said the lobbying group was preparing a response on behalf of insurers.
Hundreds of thousands of claims may have been affected, said Ehnes, but the state's audit relied on statistically significant samples of each insurer's claims, so an exact number is unknown.
Ehnes also criticized what she called the hollow provider dispute resolution process discovered at five of the seven plans — all but Anthem and Blue Shield.
Providers with a claim dispute would often end up contacting the same department that had initially denied their claim, which rarely took a "real renewed interest in the claim," Ehnes said. Corrective plans are in place to prevent that in the future, she said.