Penalties For Late Claim Payment
Special E-Mail Bulletin
Hi, everyone.
I've written to you in the past about an on-going problem with HMOs delaying claims payment. I also mentioned some state-specific laws requiring payment within certain time frames, but worried that many states had shown little evidence that their laws had any teeth.
Georgia's Insurance Commissioner seems to have teeth, and he's taking the lead in putting significant pressure on HMOs to conform to the laws. Here's an item off the newswires this morning (from insure.com) regarding a $262,000 fine against Coventry Health Care of Georgia. Let's hope that it's the start of a trend.
By the way, note the stunning comment expressed by the CEO of Coventry regarding the fine:
"The fines of this magnitude certainly have the potential to increase the cost of health coverage for consumers in the state of Georgia," McDonough says.
Incredible, isn't it? He says that consumers may suffer if HMOs are required to comply with the law. Now that's "chutzpah"!
Until next time.
Gil Weber
Georgia slaps Principal Health Care with largest HMO fine in state's history
By Jim Danko
insure.com
Handing down the stiffest penalty against an HMO in his department's history, Georgia's insurance commissioner ordered Principal Health Care of Georgia Inc. — now known as Coventry Health Care of Georgia Inc. — to shell out $262,700.20 for failing to pay its claims on time.
Insurance Commissioner John W. Oxendine issued the fine March 2 against the HMO after the commissioner's office reviewed three months of claims data, ending Sept. 30, 1999. In August, Oxendine ordered Principal and all other HMOs licensed in Georgia to submit quarterly claims data.
"It's quite time-consuming to go through all of these," says Georgia Department of Insurance spokesperson Gina Stappas Gassert, explaining why the fine is just being issued now. She adds that the penalty is the largest department fine in the state's history against a Georgia HMO.
The fine against Principal is the first to spring from the review of claims data. The state continues to review claims information submitted by other HMOs, saying more fines may be forthcoming.
"I am determined to ensure that Principal and other HMOs treat Georgia citizens fairly and comply with the law, and I will accept nothing less,'' Oxendine vows in a prepared statement on March 2.
Thomas McDonough, Coventry's chief operating officer, says the Bethesda, Md.-based company intends to appeal the fine. McDonough says Coventry's own audit shows it to be 96 percent compliant with the law. "We always intend to be compliant with all the laws in the state of Georgia," McDonough says. "The Georgia law, however, is by far the most stringent prompt-payment law in the country."
He also believes some parts of the state law are vague. According to the prompt-payment law in Georgia, health insurers must pay a claim for medical benefits to doctors, hospitals, and other health care providers within 15 working days of receiving it. If an insurer misses a payment, the company must mail a notice explaining why it has not paid. If the insurer misses the deadline on an undisputed claim, the company must pay the provider 18-percent interest.
"In our view, that was the penalty," McDonough says of the interest payment, explaining that he does not know how the commissioner arrived at the $262,700 fine.
"The fines of this magnitude certainly have the potential to increase the cost of health coverage for consumers in the state of Georgia," McDonough says.
Coventry merged with Principal Health Care on April 1, 1998. After the merger, Principal Health Care plans continued to use the Principal brand name, even though the company was no longer affiliated with Principal Life Insurance Co. Principal Health Care of Georgia's name was officially changed to Coventry on Jan. 1, 2000.
With a little more than 20,000 members as of December 1998, Principal is seen as a medium-sized HMO in Georgia, Gassert says. The commissioner's penalty against Principal comes in the wake of other fines against Georgia HMOs resulting from financial exams, which are similar to an audit, and market-conduct exams. A market-conduct exam occurs when the state looks at how the HMO is treating policyholders.
In February, the office slapped United Healthcare HMO with a $123,500 fine in connection with a number of violations, including slow claims payments and failing to respond in a timely manner to consumer complaints being investigated by the department. In December, Aetna U.S. Healthcare was fined $50,000 for raising its health care coverage rates without approval of the commissioner and in violation of Georgia law.
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