More HMO Fines For Late Payment
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Hello, everyone.
Still more evidence that Departments of Insurance are finally starting to put some teeth into laws mandating timely claims processing and payment. This time Oxford Health Plan in New Jersey has been hit for $275,000. Here's the story as reported originally by "The Record" and on today's (April 4) wire services.
Gil Weber
Oxford Fined A Record $275,000 State Says HMO Denied Claims
Source: The Record, Northern New Jersey
Publication date: 2000-04-01
Oxford Health Plans on Friday agreed to pay $275,000 in fines to the state for wrongly denying valid health claims, delaying payments to doctors past the 60-day legal limit, and depriving patients and doctors of their rights to appeal medical decisions.
The penalty against New Jersey's fourth-largest health plan, which has 171,000 members, was the largest ever levied against an HMO by the state departments of Health and Senior Services and Banking and Insurance, which share oversight of managed care.
Also Friday, the state fined United Healthcare of New Jersey $127,400 for retaining in its network and referring patients to a Sussex County doctor whose license had been suspended. For 49 days, the state charged, United continued to send patients to the unlicensed physician, even though the company had been informed of the disciplinary action.
The action against the insurer stemmed from a patient's complaint that she had been referred by United to Dr. Abdolai Khajavi, a Hardyston primary care physician, even after reading about his license suspension in the paper.
"It's a good step that the Department of Health is starting to use its enforcement powers," said Anthony Wright, program officer for New Jersey Citizen Action. "In the past, violations have been found and no fines given."
The "market conduct study" of Oxford, carried out in spring 1998 by examiners from the Department of Banking and Insurance, was the first called under HMO consumer-protection laws enacted in 1997. An earlier look at U.S. Healthcare, before the laws were strengthened, led to citations but no fines.
Oxford said payment of the fines "puts the past behind us." The consent agreement signed Friday by Oxford's president, Norman C. Payson, aimed to resolve the state's concerns amicably and did not admit liability.
In a joint statement, the two state departments said that the two companies have remedied the problems. "Both Oxford and United have corrected deficiencies that led to the fines," the statement said.
"We want to focus on the present and the future," said Maria Gordon Shydlo, an Oxford spokeswoman. "We have completed our turnaround. We are financially stable. We worked cooperatively with the department." Claims payment time, she said, now averages less than 15 days.
Oxford is the third-largest health plan in Bergen County with, 29,000 members, and the fourth-largest in Passaic County, with nearly 15,000 members. United has 22,000 members in the two counties.
Dr. Walter Kahn, president-elect of the Medical Society of New Jersey, welcomed the news of the fines.
"We're glad the state means business," he said. The society, which represents doctors statewide, "would like to see the state look at all the HMOs and make sure they comply" with laws requiring prompt payment of claims, he said.
"Hospitals and physicians shouldn't be left in the lurch," Kahn added.
The state cited Oxford for 22 separate problems occurring in 1997, 1998, and early 1999. Fourteen were uncovered by the 1998 market conduct study, which was ordered after a deluge of complaints from doctors and other health-care providers who were not being paid.
Oxford was teetering on the edge of bankruptcy at that time, having lost control of its medical expenses during a computer changeover.
Thousands of claims were lost, the stock price plummeted, and a complete set of new executives took over.
Oxford's New Jersey membership at the time had reached a peak of 250,000; it has since dropped 30 percent to 170,000, and the company has exited Medicare in some counties.
The other citations against Oxford resulted from a monitoring visit by the state Health Department to the company's Edison offices last fall, from investigations of complaints lodged with the health department, and from follow-ups to patient appeals.
The specific deficiencies the state noted at Oxford were:
Failing to pay hospitals and doctors within the 60-day limit set by New Jersey law, resulting in an $80,000 fine. Eight cases, including two involving North Jersey ophthalmologists, were cited in a June 1999 enforcement letter to Oxford. The company owed Angioletti Retina Associates of Fort Lee more than $25,000 and Dr. Cecily Lesko of Clifton more than $8,000. Oxford agreed to the $80,000 fine to settle the cases.
Eight instances of improperly denying claims by saying, for example, that a service was not covered when it actually was.
Six instances of failing to investigate claims before denying them. Together with the previous violation, it resulted in fines of $135,500.
Contracting its Medicare business to Heritage New Jersey Medical Group without obtaining final state approval, resulting in a $20,000 fine. That nine-month arrangement with the unlicensed Heritage, aimed at cutting costs, has since been terminated.
Failing to inform health care providers that they could appeal decisions to deny treatment on behalf of their patients, as allowed under New Jersey law. The company told physicians that only patients could make such appeals. It agreed to pay $10,000 for this violation.
Failing to notify members that they could appeal a second time when a decision went against them on the first appeal; failing to act on such second-stage appeals within 20 days, and failing to inform doctors that they could contact an Oxford physician if they disagreed with a decision to deny reimbursement. These fines totaled $25,000.
In the consent agreement with United Healthcare of New Jersey, the Health Department levied a $2,600 fine for each of the 49 days that the company knew about the suspension of one its network doctors but did not act to remove him.
The company's internal systems should have ensured it responded promptly to delete the doctor's name from referral lists and to alert current members and match them with new doctors, the state said.
It was the first disciplinary action against United. In the past, the health department fined First Option Health Plans $99,800 when its network did not include enough anesthesiologists to permit scheduled elective surgery, and fined NYLCare $50,000 for failing to submit data to the state for its HMO Report Cards.
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