California plans fined $4.85M for inaccurate provider payments

The California Department of Managed Health Care levied fines totaling $4.85 million against seven health plans for failure to pay claims to hospitals and physicians accurately.

The fines, which ranged from $300,000 to $900,000, were charged against almost every major health plan in California, including Blue Cross of California, Kaiser Foundation Health Plan, Blue Shield of California and Health Net.

"Providers are struggling to stay afloat in a very difficult business environment," DMHC Director Cindy Ehnes said at a Los Angeles news conference. "Improper payment of provider claims runs the risk that our healthcare delivery system could grind to a halt."

Ehnes said the plans will also have to make good on the disputed claims, which she noted run into the tens of millions of dollars.

State law requires that health plans pay 95 percent of claims in an accurate fashion, with a 5 percent margin of error permitted. However, DMHC auditors--which reviewed between 200 and 1,000 random claims per health plan--said that some insurers were paying as few as 75 percent of their claims accurately.

Moreover, five of the seven plans also stymied the appeals process for providers, often directing their grievances back to the same departments and individuals who had denied them in the first place, notes the Los Angeles Times.

All of the health plans will pay the fines within 10 days, Ehnes said. They have 180 days to pay providers their claims, along with interest and penalties.

For more:
- read the DMHC press release
- read the Los Angeles Times story