PacifiCare

Health Net reinstating 926 California policyholders

Anne Zieger — Fri, 12 Sep 2008 10:28:13 -0400

California health plan Health Net has become the next insurer to offer individual policyholders new coverage--with no medical pre-screening--to 926 people whose policies it canceled retroactively after they became ill. Health Net has signed an agreement with the California Department of Insurance under which it will pay $3.6 million in penalties, plus as much as $14 million in reimbursements for medical charges that it previously declined to pay. The company didn't admit to any wrongdoing as part of the settlement, however.

The Health Net settlement is the first with the state's Department of Insurance, but only one of several of similar fines and penalties imposed by the state's Department of Managed Care, which has arguably been the nation's most aggressive regulator of healthcare policy of late. For example, in May, Kaiser Permanente and Health Net agreed to reinstate 1,200 beneficiaries, and in June, PacifiCare agreed to offer coverage to 57 former members. It seems likely that more of the same will follow from both departments, however. The real question, as I see it, is whether the practices targeted by California regulators aren't as common in other states, or instead, that regulators elsewhere don't consider such rescissions an issue.

To learn more about this agreement:
- read this Los Angeles Times article

Related Articles:
Kaiser, Health Net agree to reinstate 1,200 beneficiaries
CA residents to get renewed health coverage
WellPoint pays hospitals $11.8M to settle bills from rescissions
PacifiCare restores canceled policies

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Health Care has ordered health plans to provide the agency with contact information for hundreds of members with rescinded policies to make sure that the members do indeed get their notices.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
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CA Blue plans will pay $13M in fines over cancellations

Anne Zieger — Fri, 18 Jul 2008 11:06:18 -0400

Two of the state of California's largest health plans have agreed to pay a combined total of $13 million in fines related to their practice of rescinding policies for members after those members became sick. The fines are the largest yet imposed by the state Department of Managed Health Care, which has been focused of late on stopping health plans from reviewing patient applications and canceling policies after the patient begins incurring large medical bills. In addition to the fines, the agreements will require the two plans, Anthem Blue Cross and Blue Shield, to offer new coverage to more than 2,200 beneficiaries. However, the two are not admitting any wrongdoing.

WellPoint-owned Blue Cross will pay a record $10 million fine, and will offer no-strings-attached coverage to 1,770 members whose policies were canceled since 2004. Competitor Blue Shield, meanwhile, will pay $43 million and offer new policies to 450 people whose policies were discontinued during the same period. Both health plans have agreed to set up a process to help ex-members recover medical bills paid out of pocket after they were dropped, as well as collect other damages, such as reimbursement for homes or business lost because unpaid medical bills ruined the patients' credit. The agreements follow on similar settlements with Kaiser Permanente, Health Net and PacifiCare.

To learn more about the agreements:
- read this Los Angeles Times piece

Related Articles:
WellPoint pays hospitals $11.8M to settle bills from rescissions
BC of California fined $1M for cancellations
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Kaiser, Health Net agree to reinstate 1,200 beneficiaries

Fri, 16 May 2008 06:59:58 -0400

Two of California's largest health plans have agreed to reinstate a total of roughly 1,200 patients whose policies were rescinded after they began incurring high medical expenses.

Under the terms of a settlement brokered by the California Department of Managed Health Care, patients whose insurance was rescinded by Kaiser Permanente or Health Net since 2004 will be allowed to buy a new policy regardless of their medical condition. As part of the deal, Kaiser has agreed to pay a $300,000 fine to the state without admitting wrongdoing, as well as making procedural changes which include developing simpler coverage applications to avoid applicant mistakes. The deal follows a $9 million judgment against Health Net won by a hair salon owner when the plan canceled her coverage while she was undergoing chemotherapy.

The Department of Managed Health Care is now trying to reach similar deals with other major health plans, including Anthem Blue Cross, Blue Shield and PacifiCare, which involve about 4,000 canceled policies.

To learn about the health plans' new deal:
- read this Los Angeles Times article

Related Articles:
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UnitedHealth suffers financial setback

Wed, 23 Apr 2008 06:59:58 -0400

After years of allegations that management engaged in financial manipulations to feather their own nest, some might see this as a bit of karma. Having already missed its first quarter financial targets, UHG has had to cut its full-year profit outlook. The company, which expects 2008 revenue around $82 billion, lowered its profit outlook by 40 cents a share to about $3.60. While UHG faces some unique challenges, this mirrors losses posted by other health plans, many of which seem likely to kick up premiums substantially at their next opportunity.

One major factor in UHG's adjusted prediction was customer losses. The company lost 530,000 commercial members during Q1 of this year, including 250,000 from its PacifiCare unit. Meanwhile, enrollment in its Medicare Part D program fell by 290,000. To boot, medical costs went up faster than income, despite raised premiums in 2006 and 2007.

This comes just as the air has started to clear from its former CEO's departure. Less than 18 months ago, former CEO William McGuire left the company with a mindbogglingly-golden parachute, options worth $1.78 billion at the time. Since then, McGuire has been forced to give up at least $400 million in assets, after regulators concluded that the options were back-dated to give him the highest possible value.

To learn more about UHG's financial picture:
- read this Modern Healthcare piece (reg. req.)

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DOJ OKs UnitedHealth buyout of Sierra

Tue, 26 Feb 2008 06:59:58 -0500

If it's willing to divest most of its Medicare Advantage business in the Las Vegas metro, UnitedHealth Group may proceed with its $2.6 billion buyout of Sierra Health Services, the U.S. Department of Justice has ruled. At the same time, the Nevada Attorney General announced that it had reached a parallel settlement under which it would also allow the deal to proceed. Sierra, which has revenues of $1.9 billion, is the largest health insurer in the Las Vegas metro area.

The original deal would have given UHG a 94 percent share of the Medicare Advantage market in Las Vegas, an obvious non-starter from an antitrust standpoint. The deal also raised the hackles of many observers, including the AMA. Now, Humana has been named as a possible buyer for the UHG's Medicare Advantage book of business in Las Vegas, the DOJ announcement said. UHG currently has 82,000 seniors enrolled in its Medicare Advantage plans, which generate $840 million per year.

To learn more about the deal:
- read this Modern Healthcare item (reg. req.)
- read the DOJ press release

Related Articles:
UnitedHealth admits to big loss of PacifiCare patients. Article
AMA tries to block UnitedHealth acquisition. Article

CA bill requires permission for cancellations

Thu, 14 Feb 2008 06:59:56 -0500

A California legislator has introduced a bill which would require health insurers to get permission before they retroactively cancel one of their beneficiaries' coverage. Under the terms of the bill, health plans would need to get prior approval from the state's tough Department of Managed Health Care before canceling or rescinding a member's policy. The filing follows a firestorm of controversy over letters issued by Blue Cross of California, which asked doctors to search out and report any conditions which might disqualify patients from coverage. (A day after the story broke, Blue Cross stopped sending the letters, but the PR damage was done.)

The bill builds on a related law sponsored by this one's backer, Assemblyman Hector De La Torre (D). De La Torre previously sponsored a measure which requires insurers to pay providers once they authorize treatment--even if the policy is retroactively canceled. That bill was approved, and went into effect Jan. 1.

To learn more about the bill:
- read this San Francisco Chronicle piece

Related Articles:
PacifiCare faces $1.33B fine. Report
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Blue Cross of CA halts patient info requests

Wed, 13 Feb 2008 06:59:58 -0500

Yesterday, we told you about Blue Cross of California's practice of sending letters to physicians asking them to look for--and report--medical conditions that could be used to cancel their patients' policies. Well, that didn't last long in the face of high-profile press coverage. Late yesterday, after a story on the subject broke in the Los Angeles Times, the health plan announced that it would no longer send out such requests. In the wake of the LAT story, the Blue plan has faced a storm of criticism from many quarters, including physicians, patients and even Gov. Arnold Schwarzenegger (R). Blue Cross of California's letter was particularly inflammatory given that the health plan, along with several of its competitors, are facing scrutiny from regulators, legislators and the courts over their practice of issuing individual policies without verifying them then canceling them when patients get ill. Of course, despite backing off, Blue Cross continues to defend the letters as having been appropriate--but it's a pretty thin argument under the circumstances.

To learn more about Blue Cross of California's about-face:
- read this Los Angeles Times piece

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BC of California fined $1 million for cancellations. Report
HealthNet fined $1M for non-disclosure of cancellation bonuses. Report

PacifiCare faces $1.33B fine

Tue, 29 Jan 2008 06:59:58 -0500

Man, California regulators are tough. Over the past year, I wouldn't be surprised if there had been more fines imposed by the state's Department of Managed Health Care (DMHC) then by state health plan regulators in all of the other states combined. Now, the state Department of Insurance is getting its piece of flesh. The DOI is expected to announce today that it will seek as much as $1.33 billion in penalties from Cypress, CA-based PacifiCare due to problems arising from its takeover by UnitedHealth Group.

Following up on consumer complaints that have come up since the merger was consummated two years ago, the DOI found 133,000 alleged violations of state laws and regs regarding payments for care, each of which carries a maximum penalty of $10,000 (producing the potential $1.33 billion exposure for UHG). Meanwhile, the state's DMHC contends that 30 percent of the claims it reviewed were improperly denied, in what it terms "very serious violations," according to executive director Cindy Ehnes. It is imposing an additional $3.5 million in fines.

To learn more about the fines:
- read this Los Angeles Times piece

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UnitedHealth admits to big loss of PacifiCare patients

Wed, 05 Dec 2007 06:59:57 -0500

UnitedHealth Group's current troubles apparently go beyond ongoing investigations into stock option grant-backdating. At an investor conference this week, UnitedHealth executives said that they're facing some big problems in integrating its PacifiCare unit, which it acquired December 2006 for $8.1 billion in stock and cash.

UHG officials said that PacifiCare lost 315,000 customers this year, a problem which they attributed to customer service problems. They also admitted that both doctors and customers were frustrated by its efforts to integrate PacifiCare into its overall operations. To address these issues, UHG execs said that they're going to make some major changes, including establishing systems to reimburse doctors more promptly, offering patients and doctors real-time information on claims payment and establishing incentives for better customer service.

To find out more about UHG's problems and proposed solutions:
- read this Business Courier of Cincinnati piece

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