Health Net

Health Net charged $41M for underpaying out-of-network claims

Anne Zieger — Wed, 27 Aug 2008 11:38:35 -0400

Health plan Health Net has paid out $41 million to the New Jersey state Department of Banking and Insurance to settle charges that it underpaid out-of-network claims for 88,000 customers in the state. State officials say the plan underpaid for out-of-network services between 1996 and 2006. The settlement includes paying $14 million back on underpaid claims to customers, $12 million in interest, $13 million in fines and $2 million to cover examination costs. This represents, by far, the largest restitution agreement and fine administered by the Department of Banking and Insurance, according to a spokesman there. More than 55,000 reimbursement checks have been sent out to plan members, ranging from a few dollars to several thousand.

Previously, in 2002, Health Net paid restitution of more than $800,000 for claims under-paid for more than 4,700 members in New Jersey. Earlier this year, meanwhile, Health Net agreed in federal court to pay class-action settlements totaling $225 million to as many as 2 million people who filed out-of-network claims from September 1997 through July 2007.

To learn more about the settlement:
- read this article from The Record (NJ)

Related Articles:
Health Net set goals, bonuses based on policy cancellations
Aetna, AMA fight over out-of-network payments
NY plans to sue UnitedHealth over MD payments

Health plans upset when employers help pay high deductibles

Anne Zieger — Mon, 25 Aug 2008 09:31:22 -0400

High-deductible health plans have been an extremely trendy idea of late, with the assumption being that consumers would use services more cautiously if they had to pay first-dollar coverage on their own. However, some employers have been muddying the waters a bit by buying high-deductible plans, then helping employees with the deductibles through their own payouts or added insurance coverage. The combined package may be as much as 40 percent cheaper than traditional coverage, while offering comparable benefits, according to one estimate for a 40-person business based in California.

Employers like this approach, which brokers have fostered in an effort to win their business. But lately, some health plans have raised a stink over this model, which they say can push costs up substantially by taking away employees' incentive to overuse services. In fact, some California plans are so upset that they're asking employers to sign statements saying that they won't combine high-deductible plans with some types of self-insurance. Employers who won't sign could lose coverage. "Wrap-around schemes really run the risk of destroying lower-premium health products by driving up the price or making them go away completely," says Chris Ohman, president and CEO of the California Association of Health Plans.

To date, Blue Shield, Health Net, Kaiser Permanente and Anthem Blue Cross have sent letters to insurance brokers threatening them with termination of their contract and loss of commissions if they sell so-called "wrap-around" packages. I doubt they're the last.

To learn more about this trend:
- read this Sacramento Business Journal piece

Related Articles:
Study: CDHP use hits 40 percent among big firms
Study: High-deductible plans cut ED visits
Insurers vigorously defend CDHPs
Pediatrics group comes out against CDHPs

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

Health Net inks $215M settlement on payment allegations

Anne Zieger — Fri, 25 Jul 2008 10:12:43 -0400

A federal judge has approved a $215 million settlement ending three class-action lawsuits alleging that health plan Health Net paid unfairly low reimbursements to out-of-network providers between 1995 and 2007. The class actions had alleged that the health plan had kept out-of-network payments unreasonably low by basing their pay schedules on a database of payment rates maintained by UnitedHealth Group subsidiary Ingenix. The suits contended that Ingenix rates were well below market.

While this settlement may end the current legal challenges for Health Net, the question of whether Ingenix itself will face bigger legal problems remains open. A similar suit seeking class-action status in Connecticut has targeted Ingenix directly, as well as a number of insurance companies. And earlier this year, New York Attorney General Andrew Cuomo announced that his office would conduct an "industrywide" investigation of Ingenix's payment practices. However, to date Cuomo hasn't filed any lawsuits targeting the UHG subsidiary.

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

Related Articles:
UnitedHealth's Ingenix faces mounting legal troubles
NY sues UnitedHealth over MD payments
New York AG expands health plan investigation

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
Kaiser forced to reinstate coverage
Blue Cross of CA settles plan-cancellation suits

Coalition protests healthcare cuts in CA

Fri, 27 Jun 2008 06:59:57 -0400

It's somewhat ironic that a Governor as well known for his commitment to physical fitness as he is for being an aging action adventure hero has proposed deep budget cuts that could leave more than one million Californians without access to healthcare. But if adopted, Arnold Schwarzenegger's budget proposals would cut Medicaid spending by more than $1.1 billion in the fiscal year that begins next Tuesday.

A coalition of providers, carriers, labor unions and consumer advocates have joined forces to protest the cuts. The coalition includes Catholic Healthcare West; the Service Employees International Union; AARP and Health Access California; Kaiser Permanente and Health Net. In January, the same group failed to convince legislators to support a bill that would have funded a $15 billion health care expansion. The proposed cuts are expected to be approved because California has a $17 billion deficit.

Providers are rallying where they can to come up with strategies for ensuring access. For example, Health Net of California said that it will provide up to $5 million in emergency loans to keep safety-net health clinics vulnerable to budget cuts open.

For more info:
- see The Los Angeles Times story

CA doctors say state health plans made $4.3B in profits

Anne Zieger — Thu, 26 Jun 2008 01:08:11 -0400

In a study sure to raise the stakes in its battle to regulate HMO spending, the California Medical Association has released a study concluding that California health plans generated $4.3 billion in profits last year, while in some cases paying their executives high salaries. It also noted that HMOs spent $6 billion on administrative costs last year--including some high executive salaries--which it contends should have gone toward lower premiums or better benefits. It singled out annual salaries topping $1 million for CEOs at Aetna, CIGNA, Health Net, UnitedHealth Group and WellPoint.

The report comes as part of the group's longer-term campaign to enact laws governing how health plans spend their money. The association is backing a bill which would require health plans to spend at least 85 percent of their annual income from premiums on medical care. The CMA study notes that if the bill were already in place, almost $1.1 billion dollars would have been spent on patient care.

To learn more about the study:
- read this San Francisco Chronicle article

Related Articles:
CA effort pushes insurers to spend more on care
CA aims to cap insurer profits
CA providers, carriers spar with patients over access
CA officials plan PPO 'report card'

PacifiCare restores canceled policies

Anne Zieger — Fri, 20 Jun 2008 11:51:13 -0400

Health plan PacifiCare of California has agreed to restore coverage to consumers whose individual policies, the state says, were canceled unfairly. Under the terms of its agreement with state's Department of Managed Health Care, the health plan will offer coverage to three consumers whose coverage was canceled within the last four years, and stand ready to reimburse for past medical claims. The health plan will also offer coverage to 57 former members, as well as expedited dispute resolution for claims. In addition, PacifiCare has agreed to pay a $50,000 fine and agree to a corrective action plan. It must comply with the corrective action plan within one year or face another fine of $500,000.

In settling with the state, PacifiCare is following in the footsteps of Kaiser and Health Net, both of which were slapped with fines of $300,000, and potential added fines of $3 million, over charges that they rescinded coverage inappropriately for members with individual policies. The state has also offered settlements to Blue Shield and Anthem Blue Cross, which are pending.

To learn more about the state's actions:
- read this Sacramento Business Journal article

Related Articles:
Health Net fined $1M for non-disclosure of cancellation bonuses
BC of California fined $1M for cancellations
Health plan industry addressing policy cancellations
Kaiser forced to reinstate coverage

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:
Health Net fined $1 million for non-disclosure of cancellation bonuses
BC of California fined $1M for cancellations
WellPoint plan cited for cancellations
CA agency mulls review of policy cancellations

Health plans drop out of CT Medicaid over disclosure rules

Tue, 13 May 2008 06:59:57 -0400

Connecticut's Medicaid program is struggling to regain its equilibrium after a standoff over new provider contracting disclosure rules prompted a handful of health plans to jump ship. In 2007, Gov. Jodi Rell (R) demanded that HMOs participating in Husky, the state's Medicaid program, share information on the details of their contracts with providers. Her position was that since they contracted with the state, they were, in essence, acting as public agencies for the purposes of participating in Husky.

The plans disagreed, however, arguing that they couldn't disclose proprietary contracting information. Two HMOs pulled out of Husky in April, leaving 120,000 Medicaid beneficiaries to transfer to other forms of coverage. A third will leave on July 1, bringing the total to 226,000 beneficiaries. Meanwhile, two participants, Anthem Health Plans and Health Net of Connecticut, are challenging the disclosure requirement in the Connecticut Supreme Court.

To learn more about the dispute:
- read this Kaiser Daily Health Policy Report item

Related Article:
CT court makes Medicaid plans disclose MD pay