Department of Managed Health Care

California bans balance billing

Anne Zieger — Thu, 16 Oct 2008 09:28:34 -0400

Capping years of debate, a new law just went into effect in California banning balance billing, a landmark measure that may further shift the balance of power in the direction of health plans. Several legal challenges regarding balance billing are going before state courts soon, but in the meantime, some hospitals are panicking about how to make ends meet when insurers underpay them.

Among the key backers of the bill was the state's Department of Managed Health Care, which argued that under existing state laws, consumers were having their credit ruined because they didn't pay the hospital's bill, or were paying out of pocket because they didn't know that they weren't responsible for that payment.

Many doctors and hospitals, however, are claiming that this law is unfair. They claim that the Department of Managed Health Care should be acting more quickly against the insurance companies when they underpay or make late payments, instead of going after the doctors themselves, who are just trying to get the money they need to keep in business.

To learn more about this law and the court battles:
- read this L.A. Times piece

CA governor vetoes bill banning some health policy cancellations

Anne Zieger — Wed, 01 Oct 2008 13:20:06 -0400

After years of controversy, in which the California's Department of Managed Health Care has struggled to stop health plans from retroactively canceling policies, Gov. Arnold Schwarzenegger (R) has vetoed a bill cracking down on this practice. This comes after the DMHC imposed multiple million-dollar fines on insurers that have canceled individual policies inappropriately, most recently in a $13 million settlement detail with Anthem Blue Cross and Blue Shield that forced the plan to reinstate thousands of people who had lost their coverage.

The new bill would have created an independent review process to examine each case of "rescission," as these cancellations are known. Under this new system, policies could be rescinded only if the health plans could prove consumers deliberately misrepresented the state of their health on their application.

Schwarzenegger said he vetoed the bill because it didn't include certain consumer protections and would benefit attorneys who wrote it. The governor wanted six other protections included in the text, including a rule demanding that insurers continue coverage for family members of someone whose policy had been dropped. However, a provision offering just this protection is included in a separate bill that the governor has already approved.

To learn more about the bill:
- read this Associated Press piece

Related Articles:
PacifiCare faces $1.33B fine
BC of California fined $1M for cancellations
Kaiser forced to reinstate coverage
CA agency mulls review of policy cancellations

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 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

CA bill gives state extra power to fine insurers who don't pay providers

Anne Zieger — Tue, 15 Jul 2008 09:25:40 -0400

In what is sure to be a cliffhanger, a bill has gone to California governor Arnold Schwarzenegger (R) for his signature, which would give the state beefed up power to fine HMOs and PPOs that don't pay providers. The bill was passed by the California Assembly with reasonable margins in both houses.

The measure is vigorously supported by the American Medical Association, which argues that physician underpayment is a national problem--and calculates that doctors' costs for collecting from insurers are about $200 million per year. While the agency arguably has such powers already, it would give the state's Department of Managed Health Care more legal cover for fining health plans that underpay or fail to pay providers.

On the other hand, it's opposed by HMOs, which are asking Schwarzenegger to issue a veto. They contend that the bill is unnecessary, given that DMHC already has substantial regulatory powers. Perhaps more significantly, the measure is also opposed by the DMHC itself, whose attorneys believe that the new rules could force the agency to become "a bill collector for providers."

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

Related Articles:
Kaiser assessed record-breaking $3 million fine
BC of California fined $1M for cancellations

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
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WellPoint pays hospitals $11.8M to settle bills from rescissions

Anne Zieger — Tue, 08 Jul 2008 11:29:43 -0400

Leading health plan WellPoint has agreed to pay $11.8 million to settle claims with hundreds of hospitals that it failed to pay after it dropped patients after treatment. WellPoint was sued by about 480 hospitals after it refused to pay them when it dropped policies of individual policyholders. The health plan had dropped these policyholders, it said, because the patients made mistakes on their applications or had pre-existing conditions. The patients, for their part, said that WellPoint subsidiary Anthem Blue Cross had improperly investigated their medical histories for evidence of such conditions after they'd submitted costly medical bills.

In their case, the hospitals said that Anthem should pay, given that the health plan authorized the care for patients who, at the time of treatment at least, were members in good standing. The fact that Blue Cross dropped the patients later had no bearing on the plan's obligation to pay these bills, the hospitals argued. Now, the hospitals will be reimbursed for these bills. As part of the settlement, they've agreed to stop trying to collect these bills from the patients.

Anthem (and WellPoint's) legal troubles on this front are far from over, however. It still faces a separate class-action suit from the state's doctors over unpaid bills for patients with canceled policies. There's also a class-action pending that was filed on behalf of more than 6,000 patients whose policies were canceled since 2001. Meanwhile, the state's Department of Managed Health Care is considering piling on more fees, having already imposed a $1 million fine last year after it concluded the rescissions were illegal. The new fines could be as much as $200,000 per violation on about 1,700 disputed cancellations.

To learn more about these legal issues:
- read this Los Angeles Times article

Related Articles:
California hospitals, MDs join Blue Cross payment suit
BC of California fined $1M for cancellations
Kaiser forced to reinstate coverage
Blue Cross of California settles plan-cancellation suits

CA sues Prime Healthcare for balance-billing insured patients

Anne Zieger — Wed, 02 Jul 2008 12:20:59 -0400

California regulators have filed suit to stop growing hospital chain Prime Healthcare Services from billing commercially-insured patients for fees that insurance companies don't pay. The practice, known as balance billing, is explicitly forbidden in some states, but California law is vague on this topic, according to observers. However, Prime's practices are so extreme in this regard that they must be stopped, according to the state's Department of Managed Health Care (DMHC).

Prime, one of the fastest-growing hospital chains in California, has acquired a dozen southern California hospitals in recent years. Along the way, it has acquired a controversial reputation, as it often cancels the majority of private insurance contracts these hospitals had in place. Such cancellations allow the hospitals to bill insurers for out-of-network services, allowing Prime to charge higher fees.

Aware of Prime's strategy, and upset at what they see as inflated bills, some insurers have begun sending Prime only partial payments for members treated at its hospitals. Prime, in turn, has been billing patients for the remainder of its fees, sometimes to the tune of as much as $50,000, which has generated a firestorm of protest among patients, insurers and state officials.

In its lawsuit, the DMHC is asking the court to forbid Prime to bill insured patients for bills owed by insurers. This follows previous legal action by Kaiser Permanente, which obtained a temporary restraining order barring the chain from collecting from its members or reporting the bills to credit agencies until the case is resolved.

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

Related Articles:
Prime Healthcare picks up three Tenet facilities
California hospital operator boots HMOs
Upstart CA hospital chain buys another facility
State stops acquisition by growing CA hospital chain

California providers, carriers spar with patients over access

Abby Christopher — Tue, 24 Jun 2008 13:30:30 -0400

Carriers and patients are at odds over what treatments and procedures are medically appropriate, and why access is denied in some cases and not in others. Patients in California are finding themselves in the precarious position of having to fight for access to services they assumed were covered. The state has established patient and consumer advocacy services to address the growing problem. Last year, the state's HMO Help Center received nearly 90,000 calls from consumers asking for help in resolving their health plan woes. About 7,000 Californians have taken advantage of third-party medical reviews since 2001, when the state Department of Managed Health Care started offering them. Last year, the department resolved 1,716 independent medical review, or IMR, cases. The Department of Insurance, which regulates a smaller number of plans, received 35,280 complaints and resolved 262 IMRs in 2007.

For more:
- read the full article in the San Francisco Chronicle