Health Net Statements Inoperative in California and Connecticut

A little while ago we posted about accusations that Health Net Inc, a for-profit managed care organization, cancelled individual health insurance policies after the policy-holders became ill and filed claims. Now the company is also accused of trying to conceal related information from state regulators.

The San Francisco Chronicle reported that

State health regulators fined Health Net Inc. $1 million Thursday for lying to investigators about paying employees bonuses based on the number of contracts they canceled after those policyholders got sick.

The penalty was the first levied on a health insurer for withholding information about incentives given to its employees.

Health Net, along with other major health insurers, is being investigated for combing through applications of members after they have filed claims to find mistakes or omissions that would justify revoking policies. Insurers say they resort to rescinding policies only when members lie about their health histories, but consumers say the questionnaires often are vague and misleading.

As part of the investigation, state regulators asked Health Net officials on two separate occasions whether the company gave financial bonuses to its employees for rescinding policies. State law prohibits tying compensation to claims decisions. Both times, plan officials denied doing so.

Health Net executives apologized Thursday for 'any misunderstanding' with the state regulators. The company, based in Woodland Hills (Los Angeles County), accepted a consent agreement and promised to stop compensation practices linked to rescission.

Meanwhile, in Connecticut, the state subsidiary of Health Net has also been accused of deception. According to the Hartford Courant,

Health Net of Connecticut is under fire from state officials for sending pharmacies fraudulent computer messages that deny some low-income children medications, and for allegedly misleading a state inquiry into thinking it didn't use the messages.

Attorney General Richard Blumenthal, who has initiated an investigation into the matter, said Wednesday he is calling for sanctions against Health Net.

'The claims are credible and compelling, and so serious and significant and so egregious it could require very strong remedies and sanctions,' Blumenthal said.

Health Net, one of four managed care organizations that provide health care to Medicaid recipients, uses a 'not covered' pharmacy computer message that falsely leads some pharmacists to believe prescriptions aren't covered when all that is required is prior authorization from the insurer.

During a DSS investigation earlier this year into the computer messages of the state's four managed care organizations, Health Net misled the state into thinking that its primary message read by pharmacists wasn't a 'not covered' message, [Connecticut Legal Services attorney Randi] Mezzy said.

Alice Ferreira, a spokesperson for Health Net, said the company did not intentionally mislead the state and that it will correct the problem immediately.

It seems that Health Net operations in at least two states have a problem with producing "inoperative" statements, in the immortal words of US President Nixon's former press secretary.

To extend an argument I have made before about the pharmaceutical industry, if health care insurers and managed care organizations want to be regarded as trustworthy, perhaps they ought to consider actually acting in ways that might inspire trust.