L.A. Care penalized $55M for 'deep-rooted, systemic failures' endangering vulnerable members

California healthcare authorities hit Local Initiative Health Authority for Los Angeles County (L.A. Care), the country’s largest publicly operated health plan, with $55 million in penalties due to numerous harmful violations that occurred between January 2019 and October 2021.

The penalties consisted of a $35 million hit from the California Department of Managed Health Care (DMHC) and another $20 million sanction from the state’s Department of Health Care Services (DHCS).

Announced Friday, the actions follow a coordinated investigation conducted by the two departments that found L.A. Care had been improperly handling enrollee grievances, failing to process requests for authorization and inadequately overseeing and supervising contracted entities regarding timely access, among other issues.

"The magnitude of L.A. Care's violations, which has resulted in harm to its members, requires immediate action," DMHC Director Mary Watanabe and DHCS Director Michelle Baass said in a joint statement. "Our investigations found several operational failures at L.A. Care, which have significantly impacted the health and safety of some of the state's most vulnerable healthcare consumers. This action is necessary to protect the plan's members, and to get L.A. Care to make serious changes to repair the plan's operations."

The departments said their investigations were triggered by a September 2020 Los Angeles Times article that identified multiple county residents who died of their conditions following extensive delays for treatment.

L.A. Care began operations in 1997 and today has over 2.4 million members. Its website cites access to quality healthcare for the county’s vulnerable and low-income residents as part of its mission.

Baass said in a statement that although L.A. Care cooperated with the departments’ investigation, the program needed to be held accountable as “the scope and breadth of its violations indicate deep-rooted, systemic failures that threaten the health and safety of its members.”

In statements to the media, L.A. Care took issue with the size of the financial penalties and said it plans to contest the fines. Fierce Healthcare has reached out to L.A. Care for confirmation.

According to the announcement from DMHC and DHCS, L.A. Care had disclosed tens of thousands of instances when it failed to respond to grievances from members in a timely manner. It also had a “significant backlog” of more than 90,000 prior authorization requests that were not processed in a timely manner between Jan. 1, 2019, and Oct. 13, 2021, according to the departments.

These delays led to documented harm ranging from weeks of unnecessary extreme pain to a patient given a six- to nine-month prognosis disenrolling from the program due to treatment delays, according to the departments’ report.

Alongside these and delegate oversight failures, the state departments’ investigation found that L.A. Care did not fund or staff its utilization management department, maintain adequate systems for timely prior authorization responses nor accurately disclose the full extent of its backlogs and past violations.