Blue Cross of California

L.A. city attorney says CA health insurer made illegal settlement offer

Anne Zieger — Tue, 14 Oct 2008 10:08:51 -0400

Anthem Blue Cross of California has apparently gotten itself into further legal problems while trying to extricate itself from previous ones. The insurance company, which was previously accused of rescinding some six thousand individual policies after members filed medical claims, has now been slapped with a suit by Los Angeles City Attorney Rocky Delgadillo for allegedly attempting to settle with ex-members unlawfully by offering them $1,000 to drop all legal claims.

According to Delgadillo, the WellPoint subsidiary apparently began sending out packets to 1,770 former members who had been disenrolled from individual policies in recent years. The packet allegedly included a letter offering them a $1,000 payment if they would release all legal claims against Anthem with "no questions asked." The notice also told former members that they'd be able to get new coverage as part of a separate settlement between Anthem and the state's Department of Managed Health Care.

Anthem and WellPoint are already in deep water with the city attorney. Delgadillo previously filed a $1 billion suit against the two, saying that they deliberately revoked about 6,000 individual policies after members filed medical claims. A hearing on that motion is set for Nov. 4.

For more information about this legal action:
- Read this Modern Healthcare piece (reg. req.)

CA residents to get renewed health coverage

Anne Zieger — Wed, 13 Aug 2008 13:58:40 -0400

About 3,400 California consumers whose individual policies were improperly revoked will soon get invitations to rejoin their health plan. The letters are being sent out as part of a batch of settlements recently announced between the state's Department of Managed Health Care and a handful of health insurers. Health plans issuing the letters include Health Net, Anthem Blue Cross of California, Blue Shield of California, Kaiser Permanente and PacifiCare, which have reached settlements over their rescission practices that included fines totaling $14 million.

The Department of Managed Health Care has ordered health plans to provide the agency with contact information for hundreds of members with rescinded policies to make sure that the members do indeed get their notices. Meanwhile, the DMHC, the state attorney general's office and health literacy experts have reviewed the noticed to make sure they'll be easily understood by consumers.

What's noteworthy, however, is that despite the fines and reinstatement of consumers, California health plans have not generally conceded that post-facto rescissions are are illegal. Most have gone into settlements screaming loudly that they'd violated no laws, despite the DMHC's firm conviction that they had. All told, it seems that even with laws on the books with arguably ban rescissions for innocent mistakes on applications, the practice is far from dead. There's more controversy to come on this issue, without a doubt.

To learn more about the reinstatements:
- read this Modern Healthcare piece

Related Articles:
WellPoint pays hospitals $11.8M to settle bills from rescissions
BC of California fined $1M for cancellations
Kaiser forced to reinstate coverage
Blue Cross of California settles plan-cancellation suits

CA insurers spent less than 85 percent of revenue on care

Anne Zieger — Mon, 14 Jul 2008 11:00:08 -0400

A new report by the California Medical Association concludes that nine of the state's major health plans spent less than 85 percent of their revenue on medical care for their beneficiaries, a level which would become law if the state legislature passes a bill the CMA supports.

The CMA's medical spending report, which addresses the fiscal year ending June 30, 2007, uses data collected by the state's Department of Managed Health Care. Spending ranged from a low of 69.4 percent for Great-West Healthcare of California, to publicly-owned L.A. Care Health Plan, which spent 97.1 percent of revenue on care. Cigna weighed in at 94.3 percent, while WellPoint-owned Blue Cross of California came in at 79 percent. Kaiser Foundation Health Plan had a medical loss ratio of 90.6 percent.

By the CMA's calculations, if all of these plans had spent 85 percent of their revenue on care that year, it would have resulted in $1 billion more to pay providers, with the majority ($933 million) coming from California's two Blue plans.

To learn more about the report:
- read this AMNews piece

Related Articles:
CA doctors say state health plans made $4.3B in profits
CA effort pushes insurers to spend more on care
CA aims to cap insurer profits
CA providers, carriers spar with patients over access

WellPoint profits fall 25 percent during first quarter

Thu, 24 Apr 2008 06:59:58 -0400

Yesterday it was UnitedHealth Group in the hot seat, and today it's WellPoint. The health insurance giant said that its first-quarter profits fell 25 percent compared with the same quarter last year. The company reported a drop in net income to $588 million for Q1 of this year, compared with $783 million for the first quarter of 2007, driven primarily by rising medical costs. This news comes despite the fact that revenues climbed 3 percent to $15.6 billion from $15.1 billion, and enrollment went up.

With a growing number of health plans reporting that they're losing ground financially, things are beginning to look bad for the sector as a whole. Generally speaking, that's not good for providers; after all, a health plan's first instinct is to clamp down on reimbursement when things look bad. The next few quarters could be scary for providers that don't have serious negotiating muscle.

To learn more about WellPoint's results:
- read this Business Courier of Cincinnati article

Related Articles:
UnitedHealth suffers financial setback
Aetna, WellPoint refuse payment for serious errors
WellPoint links employee bonuses to member health
Hospitals sue WellPoint subsidiary Blue Cross of California

With cancellations, CA health plans show suicidal persistence

Fri, 18 Apr 2008 06:59:59 -0400

I've said this before, but heaven help me, I feel I need to say it again: What on earth do California's health plans think they're going to accomplish by engaging in all-out war with the state's top insurance industry regulators?

I understand that health plans need to protect their interests, and that they certainly can't afford to pay heavy medical bills for people who deliberately try to game the system. But in this case, the plans have gotten extremely clear direction from the state's Department of Insurance and the Department of Managed Health Care (not to mention the courts) that it's just not OK to routinely rescind policies when patients get sick.

However, that hasn't stopped the state's big players from their suicidal determination to fight the power. In feats of derring-do I can only compare to a Fortune 500 CFO flipping off the SEC, they simply keep doing what they're doing and insist that despite all evidence, they're in the right. It's not unlike the posture my five-year-old takes when he's broken the cookie jar and the crumbs and ceramic shards are all over the floor.

Truth be told, things are so extreme out there that it's almost like reality TV. Watch in amazement as HealthNet lies to regulators! Gasp as Blue Cross of California pays a $1 million penalty! Look on in awe as plan executives insist that retroactive cancellations for innocent mistakes are kosher! This is far more intriguing than "Real Life Housewives of Orange County."

The problem is, reality TV is entertainment, while this is a high-stakes game in which there are many losers--doctors, patients and some ways, the health plans themselves. With any luck, California's health plan executives will come to their senses at some point... though at the moment, I'm not very optimistic. - Anne

CA regulators begin broad review of policy cancellations

Fri, 18 Apr 2008 06:59:57 -0400

In a move that could cost health insurers untold dollars, and possibly change the dynamics of the individual coverage market, the California Department of Managed Health Care has begun reviewing thousands of individual policy cancellations by the state's five major health plans. The DMHC will turn over policies dropped by the plans to an independent arbiter, who will determine whether the policies were inappropriately canceled. If the policies were wrongly canceled, the DMHC will require the health plans to reinstate those patients, and what's more, to pay all of the patient's bills incurred while the patients didn't have coverage. Meanwhile, the DMHC is ordering Anthem Blue Cross, Kaiser Permanente and Blue Shield to immediately reinstate 26 patients whose policy cancellations, in its view, were wrong on their face.

This move is perhaps the boldest in a long string of actions the DMHC has taken to prevent the state's health plans from canceling individual policies when individuals incur high medical bills. The DMHC contends that canceling such plans because of innocent mistakes on applications is unlawful.

To learn more about the DMHC's review:
- read this Los Angeles Times article

Related Articles:
BC of California fined $1M for cancellations
Kaiser forced to reinstate coverage
HealthNet set goals, bonuses based on policy cancellations
Kaiser pushes for policy-cancellation rules

Group of hospitals joins BC of CA P4P program

Thu, 20 Mar 2008 07:59:57 -0400

A group of 23 hospitals have joined Blue Cross of California's new inpatient pay-for-performance program, which is structured to give the facilities adjustments to their inpatient fixed-payment rates if they achieve certain scores on quality, clinical processes and outcomes. To participate in the Quality-in-Sights Hospital Incentive Program, hospitals must submit quality data to the California Hospital Assessment and Reporting Task Force. Hospitals getting on board include USC University Hospital in Los Angeles, Irvine (CA) Regional Hospital and Medical Center, San Ramon (CA) Regional Medical Center and University Medical Center in Fresno. To date, there's been more P4P programs involving large medical groups than hospitals in most of the country, so I'm looking forward to see how hospitals fare here.

To learn more about the program:
- read this Modern Healthcare article (reg. req.)

Related Articles:
Pay for performance becoming business as usual. Report
Case study: MI groups make P4P dollars through IT use. Report
CMS program would base hospital pay on performance. Report
Medicare P4P results show care improvements. Report
Positive results for Medicare P4P pilot. Report
Exclusive: How to make P4P work. Interview

ALSO NOTED: HHS plans surprise HIPAA audits of hospitals; LA city attorney asks Blue Cross of CA to prove claims; and much more

Tue, 04 Mar 2008 06:59:50 -0500

> HHS is planning some surprise HIPAA audits of hospitals, with a special focus on whether their IT infrastructures are secure enough. FierceHealthIT

> A large group of Cincinnati-area healthcare workers are set for a vote on whether they should unionize. Article

> The Los Angeles City Attorney is asking Blue Cross of California to substantiate some claims it made in a recent press release, including its assertion that it's developing a third-party review process to consider policy cancellations. Article

> Boston's Tufts-New England Medical Center is changing its name--and launching a $1.5 million ad campaign emphasizing its ties with Tufts to promote the new brand. Article

And Finally... His name is Henry, and he has six legs...a couple fewer than he should. Article

Health plan industry addressing policy cancellations

Thu, 28 Feb 2008 06:59:58 -0500

Hoping to get some control of a situation that is rapidly deteriorating into a series of regulatory fines, lawsuits and heinously bad PR, the health-insurance industry is mounting an initiative to deal with the issue of retroactive policy cancellations. Industry group America's Health Insurance Plans has begun pushing state regulators to adopt a draft bill giving consumers the right to appeal rescissions to an external panel. Decisions by the panel, which would be composed of independent healthcare professionals and lawyers, would be binding on all parties. Meanwhile, some individual insurance companies, such as Blue Cross of California, are preparing to roll out their own independent review programs.

The initiative comes in the wake of several legal actions that have slapped health plans engaging in these cancellations. Last week, for example, a California judge awarded $9.4 million to a hairdresser whose medical coverage was canceled by Health Net while she was being treated for breast cancer. Health Net also faces a suit filed against it by the Los Angeles city attorney, who contends that the plan engaged in a concerted campaign to cancel patients' policies when they became ill.

To learn more about the health insurance industry's plans:
- read this piece from The Wall Street Journal

Related Articles:
L.A. sues Health Net over cancellations. Report
Health Net set goals, bonuses based on policy cancellations. Report
CA regulators plan limits to health policy cancellations. Report
BC of California fined $1 million for cancellations. Report
CA agency mulls review of policy cancellations. Report
Kaiser forced to reinstate coverage. Report
Blue Cross of California settles plan-cancellation suits. Report
Kaiser pushes for policy cancellation rules. Report

L.A. sues Health Net over cancellations

Thu, 21 Feb 2008 06:59:58 -0500

The Los Angeles city attorney has filed suit against Health Net, one of the state of California's largest health insurers, contending it engaged in an illegal, secret campaign to drop patients with individual policies if they needed costly care. Meanwhile, the city attorney also is opening a separate criminal investigation into the health plan's practice of paying employee bonuses partly based on how often they could cancel policies for individually-insured members submitting large claims.

In the current suit, attorneys argue that Health Net defrauded thousands of policyholders, as the policies it sold them are of virtually no value if the plan cancels coverage when consumers need them. The suit contends that the company's business practices routinely violate more than 20 state laws, including a prohibition against canceling policyholders for making inadvertent mistakes on applications. If the city attorney succeeds in his suit, he could theoretically collect a fine for each of at least 100,000 individual policies the health plan has sold over the past four years, which could mount up into hundreds of millions of dollars. This is only the most recent legal tangle between Health Net and government regulators. Prior to this, Health Net was hit with a $1 million fine by state regulators when it lied twice to state investigators about the employee bonus program.

To learn more about the city's case against Health Net:
- read this Los Angeles Times article

Related Articles:
Health Net set goals, bonuses based on policy cancellations. Report
CA regulators plan limits to health policy cancellations. Report
BC of California fined $1 million for cancellations. Report
CA agency mulls review of policy cancellations. Report
Kaiser forced to reinstate coverage. Report
Blue Cross of California settles plan-cancellation suits. Report
Kaiser pushes for policy cancellation rules. Report