Special E-Mail Bulletin
February 2002
Texas Sues HMO For Slow Pay
Special E-Mail Bulletin
Hi, everyone.
Many healthcare providers find themselves stuck between a rock and a hard place when a third-party intermediary (contracted to a healthplan) goes belly-up and leaves the providers with unpaid claims. From state to state the laws differ on who's ultimately responsible to the providers -- the intermediary or the healthplan that contracted with the intermediary.
Recently in California the courts ruled that plans are not responsible for paying twice -- first to the intermediary and then again to the providers when the intermediary defaults. But in Texas the State Attorney General is pursuing a case against a major HMO, alleging that the plan did not properly monitor the financial condition of its intermediary, and for failing to see to it that claims were paid in the specified timeframe.
This will be another interesting case to watch. The story is from ABCnews.com and the Associated Press.
Gil Weber
Atty Gen. Sues HMO for Slow Pay
Attorney General Sues HMO for Slow Pay, Other Allegations
The Associated Press
AUSTIN Feb. 11 The state sued PacifiCare of Texas Inc., claiming the health maintenance organization has failed to monitor the finances of organizations it hired to provide health care to its Texas members.
Three of those organizations, called delegated networks, recently filed for bankruptcy and haven't paid or partially paid physicians and hospitals for services already provided, said Attorney General John Cornyn.
The lawsuit filed in Austin Monday claims that PacifiCare violated the state's Deceptive Trade Practices and Texas Health Maintenance Organization acts.
Santa Ana, Calif.-based PacifiCare Health Systems Inc. said in a statement that the lawsuit "has no merit and will only serve to continue to drive up the cost of health care for all Texans."
Texas law requires at least partial payment of or denial of properly filed bills within 45 days of receipt by a health insurance company.
The lack of or slow payments ultimately hurt patients when doctors no longer accept the insurance, Cornyn said.
The company has helped delegate networks that have faced financial problems, including paying $43 million to Texas health care providers that should have been covered by the networks, PacifiCare's statement said.
Cornyn said PacifiCare has "arrogantly refused to cooperate" with his office over the past year as it worked with several other HMOs to settle similar complaints.
In October, PacifiCare sued Cornyn's office, challenging its authority to investigate the allegations that PacifiCare violated state laws. That lawsuit is pending.
PacifiCare also has repeatedly broken promises with the Texas Department of Insurance, which has worked on four corrective action plans with the company. Those plans were never followed through, Cornyn said.
Insurance Commissioner Jose Montemayor said Monday he had tried for months to work with PacifiCare on prompt pay and other compliance issues. Frustrated, he turned to Cornyn's office earlier this month.
PacifiCare denied those allegations, saying it cooperated with the insurance department, which released PacifiCare from state oversight in April 2001.
Montemayor said his agency will pursue the case through the courts but will continue trying to negotiate with PacifiCare to collect money owed to health care providers.
The state wants an injunction to force PacifiCare to comply with prompt pay and other health insurance laws, including one that requires HMOs to have effective complaint procedures.
The lawsuit also seeks unspecified damages, penalties and restitution. Cornyn estimated the amount of unpaid claims to be in the "tens of millions."
Three of the PacifiCare's delegated networks Heritage Southwest Medical Group in Dallas, Quantum Southwest Medical Management in San Antonio and Medical Select Management in Fort Worth recently filed for bankruptcy, Cornyn said.
About 300,000 Texans are PacifiCare members, according to the attorney general's office.
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