Two new developments show renewed focus by the state’s principal health plan regulator, the Department of Managed Health Care (DMHC), on unfair health plan payment practices.
The first is guidance that was issued last week to remind health plans of their responsibilities. On March 24, DMHC issued All Plan Letter 23-008, which reminds health plans of their responsibilities to arrange and pay for care in a timely manner.
DMHC acknowledges communications from hospitals that health plans are not complying with existing state requirements on timely payment and providing payment for rendered services. This guidance follows a request from CHA asking the state to increase its enforcement of existing prompt and fair payment rules.
The guidance states that health plans must comply with the claims payment and utilization management requirements of the Knox-Keene Act, including:
- Plans must pay all claims, including the uncontested portion of claims, within statutory time frames, or otherwise automatically include interest and/or monetary penalties.
- Plans must specify reasons for contesting or denying a claim within statutory time frames.
- Plans may not request irrelevant or unnecessary information and must specify why any requested information is necessary to complete a claim.
- Plans may not rescind or modify a service authorization after the service has been rendered.
- Plans must approve, deny, or modify requests for service authorization in a timely fashion and no later than five business days after receiving the request, or no later than 72 hours if the enrollee faces an imminent and serious threat to their health.
The guidance also states that health plans should review their policies and procedures to ensure they are up-to-date and reflect the current practices of the plans. It also encourages plans to go beyond the minimum requirements in state law and evaluate how they can support hospitals with regard to timely payment to hospitals and access for enrollees. Finally, the guidance reminds health plans that DMHC may take enforcement action against plans that fail to comply with the state’s timely payment requirements.
The second development is enforcement action by DMHC for unfair payment practices. On March 27, DMHC announced the conclusion of an enforcement action that resulted in a $225,000 administrative penalty against Health Net for violations of the state’s rules prohibiting unfair payment patterns.
Following a routine examination of Health Net’s claims settlement practices conducted in early 2020, DMHC identified improper payments of over $1 million across more than 30,000 claims. The violations related to failures by Health Net to appropriately pay all interest and penalties on claims that were paid late or resolved following the completion of the provider dispute resolution process. Additionally, Health Net incorrectly upheld its original decision on claims reimbursements after they had been overturned through the provider dispute resolution process.