Friday, December 03, 2010

Health Insurers Sanctioned, Fined

It has not been a good few weeks for big US health insurance companies.  First was a report (e.g., per the Wall Street Journal) that three companies had been suspended from selling Medicare Advantage plans:
The U.S. government's Medicare program has ordered three health insurers--Universal American Corp. (UAM), Health Net Inc. (HNT) and Arcadian Health--to stop marketing to and enrolling new members in their Medicare Advantage health and prescription-drug plans, saying the companies violated regulations.

In particular,
Universal American was told to stop marketing to and enrolling people in its Medicare Advantage plans effective Dec. 5. The action doesn't affect current members or the enrolling of beneficiaries in the company's stand-alone Medicare prescription-drug plans.

Health Net had to suspend the marketing of and enrollment in its Medicare Advantage plans and stand-alone Medicare prescription-drug plans as of Friday, as the government said the company's conduct poses a 'serious threat' to enrollees. The sanction doesn't affect the status of current enrollees, however.

In a letter Friday to Theodore Carpenter, head of Universal American's Medicare Advantage business, the Centers for Medicare and Medicaid Services alleged the company has a 'longstanding pattern of prohibited marketing practices targeted to highly vulnerable populations in violation' of federal law and guidelines as well as contractual terms with CMS.

Universal American is a 'chronic poor performer' with respect to the regulations, according to CMS, which said the company's agents engaged in aggressive sales tactics and abusive behavior, and misled or confused beneficiaries or misrepresented the plan.

The agency's letter to Health Net government-programs executive Scott Kelly said the company's conduct 'poses a serious threat to the health and safety of its enrollees,' as a result of the company's 'intractable failure to provide its enrollees with prescription drug benefits in conformance" with laws, guidelines and contract terms.' CMS cited a 'history of non-compliance.'

Then, the state of California fined and ordered restitution from multiple companies, as reported by the San Francisco Chronicle:
State regulators Monday fined seven of California's largest health insurers nearly $5 million for systematically failing to pay doctors and hospitals fairly and on time.

The California Department of Managed Health Care issued the fines following an 18-month audit in which investigators looked at a small but statistically significant sample of claims. The investigation found the plans were paying on average about 80 percent of the claims correctly, far below the legal threshold of 95 percent.

'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 Department of Managed Health Care, which is charged with regulating the states' health maintenance organizations, or HMOs.

In addition to the fines, the companies must pay the doctors and hospitals restitution that is expected to run into the "tens of millions of dollars," Ehnes said. The plans will also be required to come up with a plan to correct the problem and submit to future audits.

Failing to pay providers properly makes it tougher for them to survive in the struggling economy, Ehnes said. 'If providers are not paid, patient care and access suffer,' she said.

Regulators fined Anthem Blue Cross and Blue Shield of California $900,000 each. United/PacifiCare was fined $800,000 and Kaiser Foundation Health Plan and Health Net were both hit with fines of $750,000.

The fines for Cigna and Aetna were $450,000 and $300,000, respectively, for a total of $4.85 million.

Please note that some of these companies have become "frequent flyers" on the Health Care Renewal blog.  Anthem Blue Cross in California is a subsidiary of WellPoint. WellPoint, in particular, just appears again and again on Health Care renewal.  A list of all posts about that company is here, and see this post for a list of past ethical and management missteps.  Health Net appeared in both stories above, and appeared on Health Care Renewal here.  Posts on Aetna are here.

Having been writing for this blog now for several years, I am struck by how often the conduct of particular health care organizations has been discredited, without any discernible effect on the organization's leadership or course.  It is particularly striking how the attention paid and pay given to the leaders of some health care organizations contrasts with the public record of their organization's bad behavior.

In particular, contrast the long catalog of misbehavior by WellPoint, noted above, with the enormous earnings of the company's CEO (more than $13 million in 2009), and her status as a prominent speaker on health care policy (see post here). 

In the laissez faire, anything goes, wild, wild west economy of today, spearheaded by the financial service companies that lead us to the global economic collapse, it seems that ethical leadership counts for nothing.  This is bad when it applies to the leadership of financial services, whose bad leadership can cost us all a lot of money.  It is worse when it applies to health care, whose bad leadership can cost us our health and our lives.

As I have said ad infinitum, to really reform health care, we will need to get accountable, ethical, transparent leadership of health care organizations.


Anonymous said...

Just a correction to your post, Anthem Blue Cross is a part of WellPoint, but Blue Shield of California is not. BSC is an independent not for profit insurer in CA.

Roy M. Poses MD said...

Anonymous, thanks for the correction. Post above corrected accordingly.

Anonymous said...

Agreed that there is a clear pattern of misbehavior and/or questionable ethics from certain companies. 'm curious though - are there any sizable payors you think are saying/doing the right things and acting as good corporate citizens?

Roy M. Poses MD said...


I don't really know. There are some health insurance companies/ managed care organizations which have generated frequent news stories about their misbehavior. Others have generated little such news. Are the latter group better behaved, or just less likely to have their bad behavior publicized?

I do not know of any particular health insurer/ managed care organization which is known for actively promoting ethics, accountability, integrity, and transparency. I someone can show me one, I will be happy to give it some air-time.

Anonymous said...

Could it be Roy that the ethical have been run out of business already by the unethical?

Sadly, if that is the case, solving the problem may be much thornier.

It would take collapse and rebuilding if there is no institutional foundation left.