California's Largest Insurers Fined Nearly $5 Million

News outlets report on the insurance industry.

Los Angeles Times: "California's seven largest health plans were fined nearly $5 million in total Monday for failing to properly pay medical claims submitted by thousands of doctors and hospitals over the last three years. Insurance regulators said the companies also would pay 'tens of millions of dollars' in restitution to medical providers whose claims were underpaid or incorrectly rejected. The fines cap an 18-month investigation by the California Department of Managed Health Care into the payment practices of Aetna Inc., Anthem Blue Cross of California, Blue Shield of California, Cigna Corp., Health Net Inc., Kaiser Foundation Health Plan and UnitedHealthcare/PacifiCare" (Helfand, 11/30).

San Francisco Chronicle: "The investigation found the plans were paying on average about 80 percent of the claims correctly, far below the legal threshold of 95 percent. … Patrick Johnston, the head of the state insurance trade group, said in general, health insurers are paying claims in a timely manner, but will work with the state to improve their performance" (Colliver, 11/30).

The Wall Street Journal: "UnitedHealth Group Inc. projected lower earnings next year, becoming the second big insurer to signal caution recently as the companies start to anticipate the sting from the federal health overhaul. … The forecast comes in the wake of new rules from the Obama administration last week governing how much health plans must pay out for health care compared with profit and administrative costs. The rules are one of several factors, including the economic climate and other aspects of the health law, likely to affect insurers next year" (Johnson, 11/30).

The New York Times, on how the role of HMOs has changed: "When employers first introduced H.M.O. plans to their workers in the early 1990s, the plans were considered bargains," but "[t]oday, these plans are no longer a best buy, according to an analysis released Monday by consultants Aon Hewitt. … The analysis of rates paid by 160 large companies, representing one million participants, show that H.M.O. plans have become increasingly expensive," costing more on average than a P.P.O plan. "Over the years, H.M.O.'s have changed from a health plan that sharply limited a patient's choice to one that now offers much more generous coverage than other plans that might require large upfront deductibles or significant co-payments for a doctor's visit" (Abelson, 11/29).

Minneapolis Star Tribune: Meanwhile, "Minnesota's major health insurers are ramping up incentive payments to hospitals and clinics that succeed in cutting waste and keeping patients well. The goal is to slow the growth of overall medical spending and eventually reverse it. On Tuesday, Blue Cross and Blue Shield of Minnesota plans to announce new contracts with four big health systems — Allina Hospitals and Clinics, Essentia Health, Fairview Health Services and HealthEast Care System. Under the new model, incentive payments could eventually make up about a third of total payments to these systems, up from about 10 percent currently" (Yee, 11/29).

St. Paul Pioneer Press: The incentive payments aim to "to reduce incentives for doctors and hospitals to boost their revenues by performing more procedures. 'More care is not always better care,' said Jim Eppel, senior vice president of health management and commercial markets at Blue Cross. In 2008, Minnetonka-based Medica launched a total cost of care contract with the Fairview health system and has since expanded it to other health systems in the Twin Cities region. Officials with Bloomington-based HealthPartners and Golden Valley-based PreferredOne said they also have implemented some of these contracts this year" (Snowbeck, 11/29).

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