California's seven largest HMOs must pay nearly $5 million in fines because of unfair payment practices after an 18-month state investigation revealed widespread underpayments, valued in the tens of millions of dollars, for medical care provided by doctors and hospitals.
State auditors estimate that one in every five claims was the subject of dispute because of underpayment and other mistakes by the HMOs. Collecting payment often turned into a time-consuming ordeal for medical providers who serve the 22 million Californians enrolled in health maintenance organizations.
"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 fines on the state's largest HMOs.
"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," Ehnes said at at a news conference held at a Los Angeles hospital.
Anthem Blue Cross is being fined $900,000; Blue Shield of California, $900,000; PacifiCare, $800,000; Health Net, $750,000; Kaiser Foundation Health Plan, $750,000; Cigna, $450,000; and Aetna, $300,000.
The companies are also required to review claims, going back as far as three years, to resolve amounts still owed to doctors and hospitals because of mistakes in payment coding, reimbursement rates and other problems.
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