Busted

California’s managed-care regulator announced last Wednesday (Nov. 15) it has fined insurance giant Anthem Blue Cross $5 million for repeatedly failing to resolve consumer grievances in a timely manner.

The state Department of Managed Health Care criticized Anthem, the nation’s second-largest health insurer, for systemic violations and a long history of flouting the law in regard to consumer complaints.

“Anthem Blue Cross’ failures to comply with the law surrounding grievance and appeals rights are long-standing, ongoing and unacceptable,” said Shelley Rouillard, director of the Department of Managed Health Care. “The plan must correct the deficiencies in their grievance and appeals system and comply with the law.”

Before this latest action, California had already fined Anthem more than $6 million collectively for grievance-system violations since 2002.

The state said it identified 245 grievance-system violations during this latest investigation of consumer complaints at Anthem from 2013 to 2016.

Rouillard cited one example in which Anthem denied a submitted claim for an extensive surgical procedure, even though it had issued prior approval for the operation. Twenty-two calls contesting the denial by the patient, the patient’s spouse, the couple’s insurance broker and the medical provider failed to resolve the complaint. It was not until the patient sought help from the managed-care agency, more than six months after the treatment, that Anthem paid the claim.

Overall, state officials said that calls to Anthem’s customer service department often led to repeated transfers and that the company failed to follow up with enrollees.

In a statement, Anthem acknowledged there are some legitimate findings in the audit, but it strongly disagreed with the state’s assertion that the problems are “systemic and ongoing.” The company said it will contest the fine.

“Anthem has taken responsibility for errors in the past and has made significant changes in our grievance and appeals process, as well as investments in system improvements,” the company said. “We remain committed to putting the needs of our members first.”

Anthem Inc., based in Indianapolis, sells BlueCross policies in California and 13 other states.

California is known for having tough consumer protection laws on health coverage and for assisting policyholders when they exhaust their appeals with insurers. In other actions, the state has fined insurers for overstating the extent of their doctor networks and for denying patients timely access to mental health treatment.

Jamie Court, president of Consumer Watchdog, an advocacy group in Santa Monica, said the regulatory response to these problems varies greatly by state. He singled out New York, Washington and Kansas as some of the states with a good track record of holding health insurers accountable.

“The real problem is when states don’t act there is not a great avenue for the consumer. It’s very hard to bring legal action,” Court said. “Anthem definitely needed a wake-up call. But this will also send a message to other insurers.”

Nationally, consumers continue to express their displeasure with health insurers over a wide range of issues, including denials for treatment, billing disputes and the lack of in-network doctors.

Verified complaints related to accident and health insurance coverage totaled 53,680 in 2016, according to data compiled by the National Association of Insurance Commissioners. That’s up 12 percent from 2015. The data include only incidents in which state regulators confirmed there was a violation or error by the insurer involved.

Court and other advocates welcomed the significant fine in California and said this is just the latest example of Anthem’s failure to uphold basic consumer protections.

The managed-care department said a health plan’s grievance program is critical, so that consumers know they have the right to pursue an independent medical review or file a complaint with regulators if they are dissatisfied with the insurer’s decision. The grievance system can also help insurers identify systemic problems and improve customer service, state officials said.

The state’s independent medical review program allows consumers to have their case heard by doctors who are not tied to their health plan. The cases often arise when an insurer denies a patient’s request for treatment or a prescription drug.

In 2016, insurance company denials were overturned in nearly 70 percent of medical review cases and patients received the requested treatment, according to state officials.

Meantime, Anthem is retreating from part of California’s health insurance market in 2018. The company announced in August a partial withdrawal from the state’s individual market, saying it will sell policies in about half of the state’s counties. That has meant canceled policies for about 150,000 customers.

The company’s rates in the individual market are rising sharply as well. Anthem’s average rate increase for individuals and families in California next year is 37.3 percent, the second-highest among the 11 insurers selling on the Covered California exchange.