Blue Cross Plans Fined $8.5 Million by State Regulator for Failing to Promptly Address Claims Payment Disputes With Providers

Two Blue Cross insurance plans were recently fined a total of $8.5 million by the California Department of Managed Health Care (DMHC) for failing to acknowledge and resolve provider disputes within the time frames required by law. These serious failures on the part of Blue Cross could ultimately harm patient care and are indicative of the insurance company’s continuing failure to resolve disputes not only with providers but with patients and policyholders themselves. Read on to learn more about these most recent fines. If Anthem Blue Cross or another healthcare provider has unreasonably delayed or denied your claim for healthcare services, contact Gianelli & Morris to speak with our team of experienced and dedicated California insurance bad faith lawyers.

Anthem Fails to Address Claims Payment Disputes in a Timely Manner

The California Department of Managed Health Care (DMHC) regulates HMOs and other health plans in California. The agency’s mission is to “protect consumers’ health care rights and ensure a stable health care delivery system.” On September 27, the DMHC announced fines against two Blue Cross plans totaling $8.5 million. Specifically, the fines were against Blue Cross of California, also known as Anthem Blue Cross, to the tune of $3.5 million, and a $5 million penalty issued against Blue Cross of California Partnership Plan, Inc., also known as Anthem Blue Cross Partnership Plan. Anthem Blue Cross is the trade name of Blue Cross of California. Anthem Blue Cross Partnership Plan is a managed care plan providing medical services to California residents receiving Medicare or Medicaid (Medi-Cal) as well as seniors and people with disabilities. Contracts to provide services in 27 counties, mostly in Central and Northern California, including San Francisco, Sacramento and Fresno.

The essence of the problem behind DMHC’s serious penalties against Anthem is the company’s “failing to address claims payment disputes in a timely manner from doctors, hospitals and other health care providers.” As the DMHC noted in its press release announcing the fines, this type of behavior on the part of an insurer impacts a provider’s financial stability which affects the delivery of healthcare to patients.

Health plans in California are required by law to have a Provider Dispute Resolution (PDR) process in place. When a provider has a claim payment dispute with the health plan, the provider should be able to use the plan’s PDR to submit the dispute. Insurers are required to acknowledge receipt of the dispute within two working days if the dispute is entered electronically or within 15 working days for paper disputes mailed to the plan. In either case, the insurance company has 45 working days to resolve the dispute. If the decision is in the provider’s favor, the health plan must make all past-due payments, plus penalties and interest, within five days of the decision.

In its enforcement actions, the DMHC uncovered 98,955 provider disputes where Anthem did not acknowledge receipt of the dispute within the applicable timeframe. In another 32,635 situations, the dispute was not resolved within the 45-day deadline. The problems were more persistent in the Anthem Blue Cross Partnership Plan, generating a more severe impact on doctors serving the state’s most vulnerable residents, including seniors and those with disabilities relying on Medi-Cal healthcare.

Blue Cross of California Partnership Plan failed to acknowledge receipt of 68,158 disputes and resolve 15,740 within the required timeframes. Anthem Blue Cross failed to acknowledge receipt of 30,797 provider disputes and resolve 16,895 of them promptly as required by law.

In addition to the sizeable fines, both companies will be required to implement Corrective Action Plans to improve response times to provider disputes, monitor provider disputes, remove barriers to resolution, and add staff to their provider dispute teams.

Anthem Fails to Resolve Disputes on Time With Policyholders Too

Anthem has run into the same problem with the state regulator regarding disputes with policyholders as well, as we’ve reported many times. For example, Anthem was fined $162,000 in August of this year for 21 violations across six different enforcement actions (see Anthem Blue Cross Hit With $162,000 in Penalties for Grievance Violations in August). The basis for these fines included failure to adequately consider an enrollee’s grievance, failure to provide a clear written explanation within required timeframes, and failure to resolve grievances within 30 days.

Insurance companies are required by law to respond promptly to their customers, and not only when it comes to grievances and complaints. The rules say that for “any communication from a claimant, regarding a claim, that reasonably suggests a response is expected,” the insurer must respond within 15 days, giving a complete response based on the facts as known at the time.

Anthem started 2024 off with $150,000 in penalties related to missing the 30-day deadline to resolve grievances, as well as denying ER services without providing a reason as required by law.

Anthem has been subject to much larger penalties as well in this area. As we’ve previously noted, Anthem was ordered to pay $5 million in administrative penalties for its “defective” grievance system. This penalty was based on 246 violations in 175 cases between December 2013 and August 2016, and it came on top of another nearly $6 million fine for 2,102 grievance system violations between January 2002 and August 2016.

Contact Gianelli & Morris After a Bad Faith Insurance Claim Denial in California

One would hope these significant penalties will cause Blue Cross to take real steps toward complying with the law, but we have seen DMHC fines and penalties levied against Anthem month after month for years, continuing right up to the present day. While the DMHC works to address systemic failures, Gianelli & Morris takes action on behalf of specific policyholders who suffer real harm when their insurer unfairly denies their claim. If you feel your insurance company is not dealing with you in good faith, contact us at 213-489-1600 for a free consultation to share your concerns and find out how we can help.