California Fines Largest Insurers for Underpayments to Hospitals, Physicians

The California Department of Managed Health Care has fined the state's seven largest health insurers almost $5 million for refusing to pay legitimate claims to hospitals and physicians, according to a report by the San Francisco Chronicle.

Audits in 2008 found the health plans failed to pay at least 95 percent of claims correctly, as required by state law, and instead paid about 80 percent of claims correctly on average.

The department also reported that five of the plans used a "hollow provider" dispute resolution process, in which the same department that had initially denied their claim reviews the provider's appeal.

Anthem Blue Cross and Blue Shield of California each will pay $900,000 fines, and United/Pacificare has been fined $800,000. Also, HealthNet and Kaiser Foundation Health Plan were each fined $750,000; Cigna was fined $450,000, and Aetna was fined $300,000.

Read the San Francisco Chronicle report on fines on California health insurers.

Read more coverage of claims payments:

- Major Payors Expected to Buy More Small Healthcare Plans

- Medicare Improper Payment Rate Fell in 2010

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