State fines health plans $5 million for unpaid bills

By Bobby Caina Calvan
Published: Monday, Nov. 29, 2010 - 11:44 am
Last Modified: Monday, Nov. 29, 2010 - 12:00 pm

State officials today announced nearly $5 million in fines against California's seven largest health insurers, capping an 18-month investigation into late claim payments and underpayments - amounting to tens of millions of dollars -- to thousands of doctors, hospitals and other health care providers.

Doctors and hospitals have long complained about being powerless to battle the state's biggest health plans on unpaid bills, prompting state regulators to launch massive audits.

"Our clear and consistent message is that California's hospitals and physicians must be paid fairly and on time," said Cindy Ehnes, director of the California Department of Managed Health Care, which levied the penalties.

"Providers are struggling to stay afloat, as small businesses, in a very difficult business environment. Improper payment of provider claims runs the risk that our health care delivery system could grind to a halt. Our audits have found that some health plans may consider their mistakes a 'cost of doing business,' but public disclosure and penalties change that calculation."

The agency fined Anthem Blue Cross $900,000; Blue Shield of California $900,000; United/PacifiCare $800,000; Health Net $750,000; Kaiser Foundation Health Plan $750,000; Cigna $450,000; and Aetna $300,000.

The companies are also being required to review back claims, perhaps going back three years, to determine the amounts still due to doctors and hospitals. Health plans must also submit a plan of corrective action to help reduce the number of claims disputes.

State auditors estimate that one in every five claims, on average, were either late or underpaid.

Ehnes called the problem a persistent one.

Since 2004, when the agency established a provider complaint unit, it has collected more than $22 million in additional payments to providers because of claims violations.

The audits were launched early last year as the agency tried to protect consumers from widespread billing disputes between insurers and health care providers haggling over who should pay for emergency room visits after some insurers balked on paying for out-of-network emergency room care. ... llion.html