Insurance regulators in Florida could not ignore the recent fines imposed on seven health maintenance organizations in California. The organizations were the targets of that state's Department of Managed Health Care investigation into complaints from doctors and other health care providers about insurance claim payment practices. The fines totaling $5 million were just part of the decision: The seven HMOs must also pay restitution to the providers, and that could add up to tens of millions of dollars.
The fines were not universally praised by the medical community. A representative from the state medical association suggested that the penalties are "chump change" for the hugely profitable companies. The representative added that the companies will likely pay the fines but will continue to improve their bottom lines by denying, limiting or blocking physician reimbursement.
Doctors and hospitals cannot provide care to patients as long as these practices are in place, added a representative from the California Hospital Association. The systematic denial of legitimate claims will ultimately impede patient care.
The investigation has been under way for 18 months. The companies are all major players in the health insurance industry, and all have operations or ties to other states, including Florida.
California law requires that health plans pay 95 percent of claims correctly. According to investigators, not one of the seven plans complied. Most of the companies also failed to have adequate procedures in place for settling disputes with providers.
Representatives from the companies assured reporters that they had taken steps to improve their claims processes and dispute resolution procedures. The state association of health plans noted that the HMOs involved in the investigation "generally met state requirements" for timely payment of claims.
Resource: Lawyers and Settlements "Seven California HMOs Fined Following Investigation" 11/30/10