CEO Message

Progress on Stopping Unfair Payment Practices

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Late last week, the state regulatory agency that oversees health plans issued a sweeping letter to every plan in California making it clear that unfair payment practices must cease.   

The letter comes on the heels of intense CHA advocacy that included direct outreach to Mark Ghaly, MD, secretary of the California Health & Human Services Agency, asking him to take action to address many health plans’ unfair payment practices.  

The Department of Managed Health Care’s All Plan Letter 23-008 reminds plans of their responsibilities to arrange and pay for care in a timely manner, ending such practices as failure to process “clean” claims swiftly and excessive delays on prior authorizations (similar to the challenges presented by L.A. Care, the health insurance plan that serves poor and vulnerable patients in Los Angeles County). 

The letter puts health plans on notice that they must comply with the Knox-Keene Act, detailing the following: 

  • 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. 

This is an important step toward ensuring that any health plans that have been remiss in their obligations to patients and providers take rapid steps to remedy those practices. The letter recognizes the challenges hospitals are facing: 

“The Department of Managed Health Care…encourages plans to go beyond the minimum requirements regarding timely payment and to evaluate how plans can support the hospitals in their networks to ensure enrollees continue to have timely and geographic access to hospital services.” 

On Monday, the department also fined Health Net $225,000 for failing to properly reimburse provider claims.             

These actions taken by state regulators show, again, the power of a unified hospital voice. The Department of Managed Health Care has heard you, and many health plans are now on notice that they will face increased regulatory scrutiny. 

Even with these important developments, the risk of bad practices remains. Earlier this month, CHA asked hospital CEOs and government relations executives to submit letters to plans (copying the Department of Managed Health Care) to share hospital-specific concerns and challenges. Please continue to send these letters as problems arise so that all parties understand the reimbursement challenges you face and their impact on patients. This template letter is available for your use or adaptation in reaching out to health plans.  

If you have any questions or concerns, please reach out to Ben Johnson at so that CHA can continue to share your challenges with Secretary Ghaly and prevent small problems from festering.